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

7. Failure to Withhold Past-Due Benefits

Introduction

This topic contains information on failure to withhold past-due benefits, including when to consider failure to withhold past due benefits failure to withhold past due funds initial action when failure to withhold past-due benefits is discovered action to take if the claimant returns the funds action to take if the claimant does not return the funds, and when the attorney or agent is not entitled to direct payment of fees.

Change Date

July 31, 2015

a. When to Consider Failure to Withhold Past Due Benefits

Consider the guidance in this topic when direct payment of fees is at issue as provided in Part I, 3.C.1.g, and VA has awarded and released past due benefits to the claimant (see Part I, 3.C.2.a, stage 9), but no portion of the claimant’s benefit was actually withheld for direct payment of attorney fees

b. Failure to Withhold Past-Due Benefits

VA’s failure to withhold a portion of the claimant’s past due benefits for possible direct payment of fees does not relieve VA of its obligation to pay an attorney or agent the fees to which he or she is otherwise entitled. See Snyder v. Gober, 14 Vet. App. 154 (2000), which overruled the second holding of VAOPGCPREC 27-92.

c. Initial Action When Failure to Withhold Past-Due Benefits Is Discovered

When the evidence makes out the showing specified in M21-1, Part I, 3.C.7.a, immediately contact the claimant and attempt to recover the amount requested as direct payment of fees (20 percent or less). Compute the direct-pay fee amount (20 percent or less) based upon the amount of past due benefits through the date of the decision.

d. Action to Take if Claimant Returns the Funds

If the claimant returns the funds, follow the normal procedures for making a direct-pay fee eligibility determination per M21-1, Part I, 3.C.4, and releasing the funds to the attorney or agent and appeals per M21-1, Part I, 3.C.5.

e. Action to Take if Claimant Does Not Return the Funds

If the claimant does not return the funds, prepare a direct-pay fee eligibility determination according to the normal procedures in M21-1, Part I, 3.C.4. If you find the attorney or agent to be entitled to direct payment of fees send the attorney or agent and the claimant the “Summary of Case Fee Decision Notice” using the Letter Creator on the Rating Job Aids page of the Compensation Service website Using the Letter Creator on the Rating Job Aids page of the Compensation Service website send the Debt to Veteran for Failure to Withhold Attorney Fee Letter, only to the claimant and representative, if any, at the same time as the fee eligibility is sent to the claimant and the attorney or agent, and after the due process period expires, send the claimant the final notice shown in M21-1, Part I, 3.C.13, Exhibit 6. Note: The due process notice advises the claimant that VA has found the attorney or agent entitled to fees, and will be creating a debt against the claimant’s account at the same time that VA pays the attorney or agent.

f. When the Attorney or Agent Is Not Entitled to Direct Payment of Fees

When the attorney or agent is not entitled to direct payment of fees, send the attorney or agent and the claimant the Summary of Case Fee Decision Notice using the Letter Creator on the Rating Job Aids page of the Compensation Service website.

8. Exhibit 1: Decision Notice – No Valid POA

Introduction

This topic contains a sample direct fee decision notice to send when there was not a valid POA.

Change Date

July 31, 2015

a. Decision Notice – No Valid POA, Page 1

Below is page 1 of a sample notice to send when the representative has not submitted a valid VA Form 21-22a to establish POA. Important: Use the same format below to send separately addressed notices to both the attorney or agent and the claimant.

[Attorney/Agent’s OR Claimant’s Name] [Attorney/Agent’s OR Claimant’s Address] Re: [Veteran’s claim number and claimant’s name] Dear [attorney/agent’s OR claimant’s name]: Summary of the Case An accredited^1 attorney or agent properly filed a valid direct-pay fee agreement per the provisions of 38 CFR 14.636(g) in the above-cited case. (See generally 38 CFR 14.636 for regulatory provisions relating to the payment of fees.) The fee agreement shows that the claimant and attorney/agent request that the Department of Veterans Affairs (VA) pay [percentage] of the claimant’s award of past-due benefits directly to the attorney/agent if all legal criteria for the payment of fees are met. In a rating [or Court or Board of Veterans’ Appeals] decision dated [date], the following claims were awarded to the claimant: [list claims]. The amount of past-due benefits, which is computed from the effective date of the award through the date of the decision, is [amount]. Requirements for Direct Payment of Fees Per 38 CFR 14.631(a), a valid power of attorney is required in order to represent a claim before VA. Per 38 U.S.C. 5904, fees may not be charged, allowed, or paid with respect to services of agents and attorneys before the date on which a notice of disagreement (NOD) is filed with respect to the case. In addition to the requirement that services must be performed after the filing of a NOD, VA’s regulation, 38 CFR 14.636(h), provides that if a fee agreement specifies that fees are to be paid directly by VA to an agent or attorney from past due benefits, the following requirements must be met for direct payment of fees: The total fee payable cannot exceed 20 percent of past-due benefits. The fee must be contingent on a favorable outcome, and The award of past-due benefits must result in a cash payment to the claimant. __________________________ ^1. Note: Attorneys need not have been accredited under current 38 CFR 14.626-14.637 if representation was initiated, and the claim was filed, before the effective date of those regulations, June 23, 2008.

b. Decision Notice – No Valid POA, Page 2

Below is page 2 of a sample notice to send when the representative is not accredited.

For NODs filed on or after June 20, 2007, if the above conditions are met, fees may be paid directly to the agent or attorney. In addition to the above requirements, section 14.636(c)(2) provides that for NODs filed on or before June 19, 2007, agents and attorneys may charge only for services provided after both of the following additional conditions have been met: A final decision was promulgated by the Board of Veterans’ Appeals (BVA) with respect to the issue, or issues, involved in the appeal, and The attorney or agent was retained not later than one year following the date that the BVA decision was promulgated. This condition will be met with respect to all successor attorneys or agents acting in the continuous prosecution of the same matter if the predecessor was hired within the required timeframe. This limitation does not apply if the agent or attorney was retained while the case was pending before a court. What We Decided and Why There was no valid power of attorney filed at any time before the decision awarding benefits in this case. Therefore, as a matter of law, the attorney/agent could not have provided services with respect to this claim. As a result, direct payment of fees is denied. If You Think We Are Wrong If you disagree with this determination, you may file a notice of disagreement with this decision. For more information on filing an appeal, see the enclosed VA Form 4107c, Your Rights to Appeal Our Decision – Contested Claims. Sincerely, Veterans Service Center Manager OR Pension Management Center Manager Enclosure: VA Form 4107c