Citation Nr: 0003891 Decision Date: 02/15/00 Archive Date: 02/23/00 DOCKET NO. 00-00 577 ) DATE ) ) THE ISSUE Eligibility for the payment of attorney fees from past-due benefits. ATTORNEY FOR THE BOARD D. M. Fogarty, Associate Counsel INTRODUCTION The service department verified that the veteran had pre-war service from September 1, 1941 to December 7, 1941; he was in beleaguered status from December 8, 1941 to April 8, 1942; he was missing on April 9, 1942; he was in a no casualty status from April 10, 1942 to March 1, 1945; he had recognized guerrilla service from March 2, 1945 to April 3, 1945; and he was a member of the regular Philippine Army from April 4, 1945 to May 1, 1946. The issue of eligibility for the payment of attorney fees from past-due benefits was raised sua sponte by the Board of Veterans' Appeals (Board) on its own motion; see 38 U.S.C.A. § 5904(c)(2) (West 1991 & Supp. 1999) and 38 C.F.R. § 20.609(i) (1999). The veteran and his attorney were notified of this action by a letter dated in April 1998. In a January 1996 decision, the Board determined that new and material evidence had not been submitted to reopen a claim of entitlement to recognition as a prisoner of war. In a November 1997 decision, the United States Court of Appeals for Veterans Claims (known as the United States Court of Veterans Appeals prior to March 1, 1999) (hereinafter, "the Court") vacated that decision and remanded the matter to the Board. In a June 1998 decision, the Board remanded the matter to the RO. Past-due benefits were subsequently awarded to the veteran as a result of August and September 1999 rating decisions from the Department of Veterans Affairs (VA) Manila, Philippines Regional Office (RO). FINDINGS OF FACT 1. In a January 1993 decision, a RO hearing officer determined that the veteran did not have recognized prisoner of war service for VA purposes. The veteran filed a notice of disagreement with that determination in July 1993. 2. In a January 17, 1996 decision, the Board determined that new and material evidence had not been submitted to reopen a claim of entitlement to recognition as a prisoner of war. 3. In a June 20, 1996 letter to the veteran, the Board denied his February 27, 1996 motion for reconsideration of the Board's decision. 4. The veteran subsequently retained the services of a private attorney to provide legal services on a contingency basis of 20 percent of past-due benefits awarded, to be paid directly by VA to the attorney, based upon the favorable resolution of the veteran's claims. 5. The attorney and VA's General Counsel filed a Joint Motion for Remand with the Court in November 1997. In a November 1997 decision, the Court vacated the Board's January 17, 1996 decision and remanded the matter to the Board. 6. In a June 1998 decision, the Board remanded the issue of whether new and material evidence had been submitted to reopen a claim of entitlement to recognition as a prisoner of war to the RO for further development. 7. In a November 1998 administrative decision, the RO determined that the veteran met the criteria for entitlement to benefits as a former prisoner of war under Public Laws (PL) 97-37 and 100-322. 8. In an August 1999 rating decision, the RO, in pertinent part, granted entitlement to service connection for malnutrition, evaluated as 20 percent disabling, effective February 25, 1999. 9. In a September 1999 rating decision, the RO granted entitlement to service connection for ischemic heart disease as a residual of beriberi, evaluated as 60 percent disabling, effective February 25, 1999. CONCLUSIONS OF LAW 1. The criteria for a valid fee agreement between the attorney and the veteran for representational services before VA and the Board have been met with respect to the claims of entitlement to service connection for malnutrition and ischemic heart disease as a residual of beriberi. 38 U.S.C.A. § 5904 (West 1991 & Supp. 1999); 38 C.F.R. § 20.609 (1999). 2. An attorney fee amounting to 20 percent of past-due benefits is payable from past-due benefits for the period from February 25, 1999 to August 12, 1999, resulting from the grant of entitlement to service connection for malnutrition and assignment of a 20 percent evaluation from March 1, 1999; and for the period from February 25, 1999 to September 22, 1999, resulting from the grant of entitlement to service connection for ischemic heart disease as a residual of beriberi and assignment of a 60 percent evaluation from March 1, 1999. REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Factual Background A review of the record reflects that in a July 1990 rating decision, the RO determined that the veteran was not entitled to Prisoner of War (POW) status and also denied entitlement to service connection for an irritable colon, osteoarthritis, hip joint, lower back and lower extremities, dysentery, malnutrition, and gout. The veteran filed a notice of disagreement as to that determination in September 1990. Following the issuance of a statement of the case in October 1990, the veteran failed to perfect his appeal with the submission of a substantive appeal. The veteran sought to reopen his claim that he was a prisoner of war in 1992. In a June 1992 letter to the veteran, the RO informed him that he did not meet the requirements to be considered a former POW. In a January 1993 decision, a RO hearing officer determined that the veteran did not have recognized POW service for VA purposes. The veteran filed a notice of disagreement with that determination in July 1993. A timely substantive appeal was filed in December 1993. In a January 17, 1996 decision, the Board determined that new and material evidence had not been submitted to reopen a claim of entitlement to recognition as a prisoner of war. The record also reflects a June 20, 1996 letter to the veteran from the Board in response to a motion for reconsideration received by the Board on February 27, 1996. After carefully reviewing the veteran's claim, the Board denied the veteran's motion for reconsideration. In a Joint Motion for Remand dated in November 1997, the veteran's representative and the VA Office of General Counsel moved the Court to vacate the Board's January 17, 1996 decision and remand the matter to the Board. In a November 1997 decision, the Court vacated the Board's January 17, 1996 decision and remanded the matter to the Board. A March 1998 VA memorandum reflects that the attorney was awarded $3,626.55 under the provisions of the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d) (West 1991). In February 1998 both the Board and the RO received a copy of a fee agreement executed by the veteran on January 9, 1998. The fee agreement reveals that it is a successor contract to that entered between the same parties on March 3, 1997. The fee agreement further reveals that the veteran agreed to a contingent legal fee of 20 percent of past-due benefits awarded, to be paid directly by VA to the attorney from any past-due benefits awarded on the basis of the veteran's claim or claims. In a June 1998 decision, the Board remanded the issue of whether new and material evidence had been submitted to reopen a claim of entitlement to recognition as a POW to the RO for further development. In a November 1998 administrative decision, the RO determined that the veteran met the criteria for entitlement to benefits as a former POW under Public Laws (PL) 97-37 and 100-322. The veteran was notified of that determination in a January 1999 letter. In an August 12, 1999 rating decision, the RO, in pertinent part, granted entitlement to service connection for malnutrition, evaluated as 20 percent disabling, effective February 25, 1999. In a September 22, 1999 rating decision, the RO granted entitlement to service connection for ischemic heart disease as a residual of beriberi, evaluated as 60 percent disabling, effective February 25, 1999. In an October 1999 letter, the RO informed the veteran that he was entitled to the payment of benefits from March 1, 1999. It was noted that his past-due benefits had been calculated as $3,206.00. It was also noted that the maximum attorney fee payable, 20 percent of past-due benefits, computed as $458.00, had been withheld pending a determination by the Board of eligibility for the payment of attorney fees from such past-due benefits. Analysis The Veterans Judicial Review Act (VJRA), Pub. L. 100-687, 102 Stat. 4105 (1988) allows VA claimants to enter into agreements with attorneys to represent them in proceedings before VA, as long as the fee charged is neither "unreasonable" nor "excessive." A fee may be charged to a claimant if all of the following conditions are met: 1. A final decision must have been promulgated by the Board with respect to the issue, or issues, involved. Fees may neither be charged, allowed, nor paid for services provided prior to the date of the Board's decision. 38 U.S.C.A. § 5904(c)(1); 38 C.F.R. § 20.609(c)(1). 2. The notice of disagreement that preceded the Board's decision with respect to the issue, or issues, involved must have been received by the agency of original jurisdiction (the RO) on or after November 18, 1988. V.J.R.A. Section 403, 102 Stat. at 4122; 38 C.F.R. § 20.609(c)(2). 3. The attorney must have been retained not later than one year following the date that the decision by the Board with respect to the issue, or issues, involved was promulgated. (This condition will be considered to have been met with respect to all successor attorneys at law or agents acting in the continuous prosecution of the same matter if a predecessor was retained within the required time period.) 38 U.S.C.A. § 5904(c)(1); 38 C.F.R. § 20.609(c)(3). If any of the foregoing criteria are lacking, a fee may not be charged. In a precedent opinion, the VA's Office of the General Counsel cited analysis of the legislative history of the VJRA contained in the Court decision in In the Matter of the Fee Agreement of Smith, 1 Vet. App. 492, 508-509 (1991), which highlighted the fact that Congress only envisioned paid attorney representation after the Board first entered a final decision on a claim. The General Counsel concluded that an attorney may not receive or solicit a fee in connection with representation of a claimant before the Department on a benefits issue until after the Board first issues a final decision on that claim. Furthermore, a remand decision is not a "final" decision of the Board. VAOPGCPREC No. 18-92, 57 Fed. Reg. 49747 (1992); 38 C.F.R. § 20.1100(b) (1999). In the present case, the Board's January 1996 "final decision" addressed the issue of whether new and material evidence had been submitted to reopen a claim of entitlement to recognition as a POW. The Board recognizes that the rating decisions resulting in past-due benefits awarded to the veteran addressed the issues of entitlement to service connection for malnutrition and for ischemic heart disease as a residual of beriberi. However, the veteran was awarded service connection for those disabilities because of his status as a former POW. See 38 C.F.R. § 3.309(c) (1999). Thus, the Board concludes that the issues are inextricably intertwined because adjudication of the issue of entitlement to recognition as a POW directly affected the merits and outcome of the adjudication of the service connection issues. Therefore, the Board finds that the first condition has been met. Additionally, the notice of disagreement that preceded the Board's decision was received by the RO after November 18, 1988. In consideration of whether the attorney was retained within one year following the date of the Board's promulgation of the underlying decision, the Board notes that the veteran had 120 days from the January 17, 1996 decision to file an appeal or request reconsideration. The veteran's motion for reconsideration was received by the Board on February 27, 1996. The Board denied the veteran's motion for reconsideration on June 20, 1996. In Rosler v. Derwinski, 1 Vet. App. 241 (1991), the Court found that if a claimant, before filing a notice of appeal, filed a motion for reconsideration within 120 days of an initial Board decision, the finality of the initial Board decision is abated by that motion for reconsideration and a new 120 day period begins to run on the day on which the Board mails to the claimant notice of its denial of the motion for reconsideration. See also Blackburn v. Brown, 8 Vet. App. 97, 100 (1995). The Court has also stated that a Board decision was final and appealable to the Court until the claimant's motion for reconsideration temporarily stripped it of finality. The Court further stated that finality was restored when the Chairman of the Board denied reconsideration. See Murillo v. Brown, 8 Vet. App. 278, 279 (1995). Thus, in the present case the Board's decision did not become final until the June 20, 1996 denial of the veteran's motion for reconsideration. The January 9, 1998 fee agreement notes that it is a successor to the fee contract entered into between the parties on March 3, 1997. The original March 3, 1997 fee agreement was entered within one year of the final Board decision. Therefore, the criteria under which attorney fees may be charged have been met. The Board now turns to the question of whether the attorney may be paid a fee directly by VA from past-due benefits awarded the veteran. In that regard, the following criteria must be met: (1) The total fee payable (excluding expenses) does not exceed 20 percent of the total amount of past-due benefits awarded; (2) the amount of the fee is contingent on whether or not the claim is resolved in a manner favorable to the claimant or appellant; (3) the award of past-due benefits results in a cash payment to a claimant or an appellant from which the fee may be deducted; and (4) the claimant or appellant and an attorney have entered into a fee agreement providing that payment for the services of the attorney will be made directly to the attorney by VA out of any past-due benefits awarded as a result of his successful appeal to the Board or an appellate court, or as a result of a reopened claim before VA following a prior final denial of such benefits by the Board or an appellate court. 38 U.S.C.A. § 5904(d); 38 C.F.R. § 20.609(h). The contingency fee agreement signed in January 1998 as an amendment to the March 1997 agreement, was executed by both the veteran and his attorney. By definition, the payment of the attorney fee was contingent on whether or not the claim was resolved successfully. The agreement provided that the attorney's services were to be rendered on a contingent basis of 20 percent of past-due benefits awarded. A fee that does not exceed 20 percent of past-due benefits is presumed to be reasonable. 38 C.F.R. § 20.609(f). Additionally, the requirement that an award of past-due benefits resulting in a cash payment to the appellant from which the attorney fee may be deducted has been met, since the August and September 1999 rating decisions established the grant of entitlement to service connection for malnutrition, evaluated as 20 percent disabling, effective February 25, 1999, and for ischemic heart disease as a residual of beriberi, evaluated as 60 percent disabling, effective February 25, 1999. The provisions of 38 C.F.R. § 20.609(g) and (h) require that the fee agreement include an applicable VA file number and be filed with the Board and the RO within 30 days of its execution. A review of the record discloses that the January 1998 fee agreement did not contain the veteran's VA file number, but it was included in the attorney's cover letter. A copy of that agreement was furnished to both the Board and the RO within 30 days of its execution. Based upon these facts, the Board finds that the attorney was in substantial compliance with the provisions of 38 C.F.R. § 20.609(g) and (h). Although he did not strictly adhere to the letter of that regulation, it cannot be said that he violated its spirit. Consequently, the Board must determine whether the fee agreement provided for the payment of the services of the attorney directly to that attorney by VA. As noted above, stated plainly within the context of the attorney fee agreement is a proviso that any contingent fees are to be paid by VA directly to the attorney from any past due benefits awarded on the basis of the veteran's claim. The Board notes that the agreement also provided that the attorney could pursue the payment of EAJA fees. The record also indicates that the attorney has been paid an award pursuant to EAJA in the amount of $3,626.55. The issue of the relationship between fees awarded pursuant to 38 U.S.C.A. § 5904(d) and pursuant to EAJA has been addressed by VA's General Counsel in VAOGCPREC 12-97, 62 Fed. Reg. 37952, 37953 (July 15, 1997). In VAOGCPREC 12-97, the General Counsel concluded that § 506(c) of the Federal Courts Administration Act of 1992 (FCAA), Pub. Law No. 102-575 (Oct. 29, 1992) provides that, where the claimant's attorney receives fees for the same work under both 38 U.S.C.A. § 5904 and 28 U.S.C.A. § 2414, "the claimant's attorney refunds to the claimant the amount of the smaller fee." The attorney must keep only the larger of the fees recovered, and must refund the amount of the smaller fee to the claimant (in this case, the veteran) in accordance with § 506(c) of the FCAA. The Board is bound by this opinion. See 38 U.S.C.A. § 7104(c) (West 1991 & Supp. 1999). This issue was also addressed by the General Counsel. In VAOGCPREC 12-97, the General Counsel concluded that there was no authority for the Board to take any action, such as offset of amount of the EAJA fees, to ensure that the attorney fulfills his responsibility to refund the smaller fee to the claimant. In light of the above, the Board does not have the direct authority to order the attorney to refund the smaller sum to the veteran. Nor does the Board have the authority to offset the amounts. Nonetheless, the Board is confident that the attorney will promptly refund the smaller amount to the veteran. The Board notes that failure to refund the lesser fee to the claimant would be a violation of professional conduct and a direct violation of federal law. Therefore, the Board concludes that the attorney's fee may be paid out of past-due benefits, pursuant to 38 C.F.R. § 20.610(b) (1999). The contingency fee agreement did not violate this regulatory provision. Based upon the August 1999 RO decision, the effective date of the grant of a compensable evaluation for malnutrition, evaluated as 20 percent disabling, is February 25, 1999. Additionally, based on the September 1999 RO decision, the effective date of the grant of a compensable evaluation for ischemic heart disease as a residual of beriberi, evaluated as 60 percent disabling, is February 25, 1999. In light of this, the inclusive dates for the purpose of entitlement to attorney fees based on the veteran's receipt of a compensable evaluation for malnutrition are February 25, 1999 to August 12, 1999 (the date of the rating decision granting the benefit). Likewise, the inclusive dates for the purpose of entitlement to attorney fees based on the veteran's receipt of a compensable evaluation for ischemic heart disease as a residual of beriberi are February 25, 1999 to September 22, 1999 (the date of the rating decision granting the benefit). ORDER Eligibility for the direct payment by VA of attorney fees is established. The attorney should be paid 20 percent of past- due benefits resulting from the grant of entitlement to service connection for malnutrition and assignment of a 20 percent evaluation for the period from February 25, 1999 to August 12, 1999; and resulting from the grant of entitlement to service connection for ischemic heart disease as a residual of beriberi and assignment of a 60 percent evaluation for the period from February 25, 1999 to September 22, 1999. John E. Ormond, Jr. Member, Board of Veterans' Appeals