Citation Nr: 0005035 Decision Date: 02/25/00 Archive Date: 03/07/00 DOCKET NO. 99-22 208 ) DATE ) ) THE ISSUE Eligibility for payment of attorney fees out of past due benefits. ATTORNEY FOR THE BOARD Sabrina M. Tilley, Counsel INTRODUCTION This matter relating to attorney fees arises from a September 30, 1999, rating decision of the Department of Veterans Affairs (VA) regional office (RO) which resulted in the award of past-due benefits to the veteran. By letter dated November 19, 1999, the RO notified the veteran and the attorney of the payment of past-due benefits and the referral of the file to the Board of Veterans' Appeals (Board) for a decision concerning the attorney's eligibility for payment of a fee for services from the 20 percent of past-due withheld by the RO. They were given 30 days within which to submit evidence or argument to the Board concerning the payment of attorney fees. No response has been received from the veteran. The attorney responded by letters dated in October and November 1999. FINDINGS OF FACT 1. In a December 8, 1997 decision, the Board, in part, denied a claim of entitlement to an increased rating for service-connected bronchial asthma. 2. The notice of disagreement that preceded the December 1997 decision is presumed to have been after November 1988. 3. The attorney was retained by the veteran in February 1998. 4. In February 1998, a copy of a fee agreement between the veteran and the attorney was filed at the Board. 5. The veteran appealed the December 1997 Board decision to the United States Court of Veterans Appeals (now the United States Court of Appeals for Veterans Claims, hereinafter the Court) which, in June 1998, in part remanded and vacated the portion of the Board's 1997 decision that denied entitlement to an increased rating for bronchial asthma. 6. The Board remanded the claim to the RO in October 1998. 7. By a September 30, 1999 rating decision, the RO increased the disability rating for service-connected bronchial asthma from a 10 percent to a 30 percent rating, effective October 7, 1996. 8. The veteran and attorney were notified of that determination by correspondence dated in October 1999. CONCLUSIONS OF LAW 1. The criteria under which a valid fee agreement between the veteran and his attorney as to representation before VA and the Board may be executed have been met regarding the attorney's representation in the claim for entitlement to an increased rating for bronchial asthma. 38 U.S.C.A. § 5904(c) (West 1991 & Supp 1999); 38 C.F.R. § 20.609(c) (1999). 2. The criteria under which an attorney may be paid a fee for her service directly by VA from past-due benefits have been met for the period from October 7, 1996 to September 30, 1999. 38 U.S.C.A. § 5904(d) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(h) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. Eligibility for Payment of Fee from Past-Due Benefits This matter relating to attorney fees arises from a September 30, 1999, rating decision of the RO that resulted in the award of past-due benefits to the veteran due to the assignment of an increased disability evaluation for service- connected bronchial asthma. A December 1997 Board decision denied claims of entitlement to an increased rating for service-connected headaches, an increased rating for service-connected bronchial asthma, and a temporary total disability rating based on hospitalization from March 22, 1995 to April 12, 1995, under the provisions of 38 C.F.R. § 4.29. The veteran appealed that determination to the Court. Granting a joint motion the parties, the Court, in June 1998, remanded and vacated the portion of the Board's 1997 decision that denied entitlement to an increased rating for headaches and an increased rating for bronchial asthma. The Board remanded the claim to the RO in October 1998. By a September 30, 1999 rating decision, the RO increased the disability rating for service-connected bronchial asthma from a 10 percent to a 30 percent rating, effective October 7, 1996. By letter dated October 19, 1999, the RO notified the veteran and the attorney of the payment of past-due benefits and the referral of the file to the Board for a decision concerning the attorney's eligibility for payment of a fee for services from the 20 percent of past-due withheld by the RO. They were given 30 days within which to submit evidence or argument to the Board concerning the payment of attorney fees. No response has been received from the veteran. However, the attorney responded in October 1999 and November 1999. The attorney is requesting payment of attorney fees from past-due benefits. The applicable statutory and regulatory provisions stipulate three criteria that must be met before an attorney or agent may charge claimants or appellants for their services before VA concerning claims for VA benefits. 38 U.S.C.A. § 5904(c) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c) (1999). These criteria are: 1) promulgation by the Board of a final decision with respect to the issue or issues involved; 2) the notice of disagreement (NOD) which preceded the Board decision with respect to the issue or issues involved was received by the RO on or after November 18, 1988; and 3) the attorney or agent must have been retained not later than one year following the date that the Board decision with respect to the issue or issues involved was promulgated. It appears that these three criteria are satisfied in this instance. As noted above, the Board promulgated a final decision on December 8, 1997, in part of which it denied a claim of entitlement to an increased rating for service- connected bronchial asthma. The veteran's notice of disagreement is presumed to have been on or after November 18, 1988, as the Court assumed jurisdiction over the matter. See Veterans Judicial Review Act, Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). In addition, the veteran retained the attorney in February 1998. Thus, the attorney was retained within the one-year period following the December 1997 Board decision. Under 38 U.S.C.A. § 5904(d) and 38 C.F.R. § 20.609(h) (1999), the following requirements must be met for VA to pay the attorney's fee from past-due benefits: (1) a copy of a fee agreement is in the veteran's file; (2) past-due benefits are payable based on a favorable resolution of the issue or issues previously before the Board; (3) the total fee provided for in the agreement (excluding expenses) does not exceed 20 percent of past-due benefits; and (4) the amount of the fee must be wholly contingent on whether or not the "matter" is resolved in a manner favorable to the claimant. In February 1998, a copy of a fee agreement between the veteran and the appellant was filed at the Board. This agreement reflects the parties agreed that attorney fees would constitute 20 percent "of any amount pain as a lump- sum and representing the client's retroactive benefits for the period from the date benefits commence through the date benefits are awarded." Attorney fees were to be paid directly from retroactive benefits by VA as provided under 38 C.F.R. § 20.609(h) Also, it was noted that the client was to pay "all out-of-pocket expenses incurred in connection with attorney's representation such as court filing fees. These are in addition to the 20% fee described above." Consequently, the appellant satisfies the criteria for a valid fee agreement. This agreement is presumed to be reasonable, as the total amount of fees are no more than 20 percent from past due benefits. 38 C.F.R. § 20.609(f). "Past-due benefits" is defined in 38 C.F.R. § 20.609(h)(3) as consisting of a nonrecurring payment resulting from a benefit granted on appeal or awarded on the basis of a claim reopened after a denial by the Board or a lump sum representing recurring amounts which accrued between the effective date of the award or increase and the date of the decision implementing a grant of benefits after an initial denial by the Board. Consequently, the attorney is entitled to payment of 20 percent of the amount accrued between October 7, 1996, the effective date of the award, and September 30, 1999, the dated of rating decision granting the benefit. This may differ from the amount withheld by the RO pending the Board's decision on the attorney's eligibility for payment. II. Fees Paid Pursuant to the Equal Access to Justice Act (EAJA) A November 24, 1999 letter from the attorney is to the effect that the veteran had received an EAJA award of $947.58. In addition, the attorney stated that it was her intention to send that amount to the veteran less $170 that constituted the cost of expenses incurred to obtain additional records. Under the EAJA, certain prevailing parties in litigation against the United States government may recover attorney fees at statutory rates unless the government's position in the litigation was substantially justified. See 28 U.S.C. § 2412(d)(1)(A). § 506(a) of the Federal Courts Administration Act of 1992 (FCAA), Pub. L. No. 102-572, 106 Stat. 4506, amended 28 U.S.C. § 2412(d)(2)(F) to make the EAJA applicable to the Court. See Jones v. Brown, 41 F.3d 634, 635-36 (Fed. Cir. 1994). In addition, § 506(c) of the FCAA defines the relationship between attorney fees awarded under 28 U.S.C.A. § 2412 and 38 U.S.C.A. § 5904(d) and how the fees should be allocated if fees are awarded under both statutes. Section 506(c) provides in pertinent part that: Section 5904(d) of title 38, United States Code, shall not prevent an award of fees and other expenses under section 2412(d) of title 28, United States Code. Section 5904(d) of title 38, United States Code, shall not apply with respect to any such award but only if, where the claimant's attorney receives fees for the same work under both section 5904 of title 38, United States Code, and section 2412(d) of title 28, United States Code, the claimant's attorney refunds to the claimant the amount of the smaller fee. Pub. L. No. 102-572, § 506(c), 106 Stat. 4506, 4513 (28 U.S.C. § 2412 note). This issue was addressed by the General Counsel in VAOGCPREC 12-97, 62 Fed.Reg. 37952, 37953 (Jul. 15, 1997). In VAOGCPREC 12-97, the General Counsel concluded that § 506(c) of the FCAA expressly provides that, where the claimant's attorney receives fees for the same work under both 38 U.S.C. § 5904 and 28 U.S.C. § 2412, "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. 38 U.S.C.A. § 7104(c) (West 1991). The Board is also bound by this opinion under 38 U.S.C.A. § 7104(c) (West 1991). The attorney has already expressed her intention to forward the funds from the EAJA award to the veteran. I note that the Board does not have the direct authority to order the veteran's attorney to refund the sum of the award from EAJA to the veteran or to offset that amount from the past-due benefits withheld. Nonetheless, in light of the fact that the attorney has already indicated her intent to refund the lesser fee, and the fact that failure to refund the lesser fee to the claimant would be a violation of professional conduct and a direct violation of federal law, the undersigned sees no basis for concern that immediately after the attorney receives the fee from past due benefits withheld she will not promptly refund the amount received from EAJA to the veteran. ORDER Eligibility for payment directly by VA to the attorney for services rendered before VA is established. The attorney should be paid 20 percent of past-due benefits awarded the veteran pursuant to the RO's September 30, 1999 rating decision, for the period from October 7, 1996 to September 30, 1999. MARY GALLAGHER Member, Board of Veterans' Appeals