Citation Nr: 0003752 Decision Date: 02/14/00 Archive Date: 02/15/00 DOCKET NO. 00-00 680 ) DATE ) ) THE ISSUE Eligibility for payment of attorney fees from past-due benefits. ATTORNEY FOR THE BOARD N. L. Rippel, Associate Counsel INTRODUCTION The veteran served on active duty from July 1975 to January 1977. This matter comes before the Board of Veterans' Appeals (BVA or Board) from the Department of Veterans Affairs (VA) Regional Office (RO) in Cleveland, Ohio. FINDINGS OF FACT 1. The Board has not entered a final decision on the underlying issue of entitlement to an increased evaluation for a nervous condition; however, a July 17, 1995, Board decision failed to adjudicate the issue in question, a notice of disagreement was received on that issue by VA after November 18, 1988; a supplemental statement of the case (SSOC) was issued, and a substantive appeal effectively appealed that issue to the Board. 2. On September 18, 1995, the veteran and his attorney entered into a contingent attorney fee agreement, which provided that 20 percent of past-due benefits were to be paid by the VA to the veteran's attorney. 3. A July 1999 RO rating decision granted an increase in disability compensation for service connected paranoid schizophrenia, from 30 to 100 percent, effective from August 1991, and that determination resulted in past-due benefits being payable to the veteran. CONCLUSION OF LAW The requirements for payment of attorney fees from past-due benefits by the VA pursuant to the terms of the September 1995, attorney fee agreement, for the receipt of additional compensation for service-connected paranoid schizophrenia from 30 to 100 percent, for the period of time between August 26, 1991, and July 12, 1999, have been met. 38 U.S.C.A. § 5904 (West 1991 & Supp. 1999); In Matter of Smith, 10 Vet. App. 311 (1997); In Matter of Fee Agreement of Cox, 11 Vet App. 158 (1998); 38 C.F.R. § 20.609 (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSION A determination of basic eligibility for attorney fees paid by the VA from past-due benefits generally requires: (1) A final decision promulgated by the Board, (2) a notice of disagreement pertaining to that decision dated on or after November 18, 1988, and (3) the retention of counsel not later than one year after the date of the Board's decision. See 38 U.S.C.A. § 5904(c); 38 C.F.R. § 20.609(c). In this case, the Board issued a decision on July 17, 1995, denying service connection for a bilateral hip disorder. In that decision, the Board noted that although the veteran had disagreed with a denial of an increased rating for a nervous condition, and an SSOC had been issued, no substantive appeal followed on that issue. The Board noted that, as such, the only issue in appellate status at that time was that of the hip disorder. Thereafter, the veteran and his attorney entered into an attorney fee agreement to represent the veteran in his claim for VA benefits denied in the July 1995 Board decision. At that time, the veteran was appealing the denial of this claim to the United States Court of Appeals for Veterans Claims (Court). The attorney fee agreement called for the attorney to be paid on a contingent basis 20 percent of any past-due benefits directly by the VA. In February 1997, the Court issued an Order vacating the Board decision and remanding the case to the Board for further action. The Court found that the issue of an increased evaluation for a nervous condition had been effectively appealed to the Board, and that the Board failed to adjudicate the issue. In January 1998, the Board issued a decision remanding three issues, including entitlement to an evaluation in excess of 30 percent for paranoid schizophrenia, to the RO for development consistent with the Court decision. The Board pointed out its failure to adjudicate this claim for an increase as noted by the Court. Following the submission of additional evidence and additional examination of the veteran, the RO, in a rating decision dated July 12, 1999, granted a 100 percent schedular evaluation for paranoid schizophrenia, effective from August 26, 1991. The other two issues remanded by the Board remained denied. By letter dated August 14, 1999, the veteran and his attorney were informed that past-due benefits resulting from this award had been computed as $121,113.00, and that $24,222.60, or twenty percent of the past-due benefits, had been withheld as the maximum attorney fee payable, pending a determination by the Board as to the issue of attorney fees. Based on this evidence, the Board finds that the September 1995, attorney fee agreement would not satisfy the aforementioned eligibility requirements under 38 U.S.C.A. § 5904(c) and 38 C.F.R. § 20.609(c). Clearly the record includes no final decision promulgated by the Board on the issue of an increased evaluation for paranoid schizophrenia, despite a notice of disagreement pertaining to that decision received in October 1991, thus after November 18, 1988, and documentation reflecting the retention of counsel within one year of the Board's July 1995 decision. Therefore, all of the statutory criteria for payment of attorney's fees directly by VA out of past-due benefits would technically not be met. See 38 U.S.C.A. § 5904(d). However, the decision of the Court in In Matter of Smith, 10 Vet. App. 311 (1997) and in In Matter of Fee Agreement of Cox, 11 Vet App. 158 (1998) are applicable to the case now before the Board. The Court held in In Matter of Smith that, "Where the Board fails to adjudicate a claim that was reasonably before it, the net outcome for the veteran amounts to a denial of the benefit sought." In the Order issued in connection with the case presently before the Board, the Court expressly noted that the Board improperly found the issue of an increased evaluation had not been appealed to the Board. In In Matter of Smith, the Court vacated and remanded a decision of the Board which had determined that the attorney was not entitled to fees from past-due benefits resulting from a grant of a total rating based on service-connected disabilities (TDIU). The grant of TDIU discussed in Smith stemmed from the Court's earlier remand of a TDIU claim. The Court noted that while the Board had not affirmatively rendered a final decision on the issue of TDIU, the issue had been reasonably raised and that the Board's failure to address the issue had been in error. In Matter of Smith at 314. The Court held as a matter of law that the Board's failure to adjudicate the TDIU claim that was properly before it constituted a final adverse decision of the Board with respect to that claim. Id. The Court's decision in Cox was similar to that reached in Smith in that the Court held that the Board had in its initial review of the claim failed to adjudicate the veteran's TDIU claim. As in Smith, the Court reasoned that the Board erred in failing to address the TDIU claim, which was properly before the Board and the failure to address the claim amounted to a final decision on the claim. The Board was bound at the time of the decisions in Smith and Cox by the law of the case doctrine. In Browder v. Brown, 5 Vet. App. 268, 270 (1993), the Court described the law of the case doctrine: "When a case has been once decided by this court on appeal, and remanded to the circuit court, whatever was before this court, and disposed of by its decrees, is considered as finally settled. The circuit court is bound by the decree as the law of the case, and must carry it into execution according to the mandate." In re Sanford Fork & Tool Co., 160 U.S. 247, 255-6, S. Ct. 291, 293, 40 L. Ed. 414 (1895). Thus, when the Court in Smith and Cox determined that the Board's failure to address the TDIU claims amounted to final decisions on the claims, the Board was bound by the Court's determinations. In other words, the Board was able to take jurisdiction of the TDIU issue only because the Court had done so initially. While the case now before the Board materially differs from the cases of Smith and Cox, it is well-settled that a failure to adjudicate a reasonably raised claim in cases such as the one presently before the Board, has the net outcome, to the veteran, of a denial. In the current case, the veteran appealed the RO's decision denying an increased evaluation, and thereafter continuously communicated his intent to pursue that claim. The Court clearly addressed this issue in its Order and acknowledged the fact that the issue should have been decided by the Board. Counsel for the veteran has adamantly maintained this position. Accordingly, the Board concludes that, in view of the specific facts of this case, pursuant to Smith and Cox, the failure of the Board to adjudicate the claim of an evaluation in excess of 30 percent for a nervous condition, paranoid schizophrenia, was effectively a denial of that reasonably raised, and according to the Court, appealed claim. Further, under this line of cases, the attorney should not otherwise be precluded from being paid attorney fees from past-due benefits. Further, the Board notes that the other basic requirements have been met because the total fee (excluding expenses) required in the agreement does not exceed 20 percent of the total amount of past-due benefits awarded, the amount of the fee is contingent on whether the claim is resolved in a manner favorable to the veteran, and, as reflected in the RO's August 1999 letter, the award of past-due benefits resulted in a cash payment to the veteran from which a fee may be deducted. See 38 C.F.R. § 20.609(h)(1). Under the law, the Board may order a reduction in the fee called for in the agreement if the Board finds that the fee is "excessive or unreasonable." Matter of Fee Agreement of Smith, 4 Vet. App. 487, 492 (1993), vacated in part on other grounds sub nom. In re Wick, 40 F.3d 367 (Fed. Cir. 1994); Matter of the Fee Agreement of Vernon, 8 Vet. App. 457, 459 (1996). The Board notes that under 38 C.F.R. § 20.609(f), fees that total no more than 20 percent of any past-due benefits awarded will be presumed to be reasonable. The Board concludes that the fee agreed to in the fee agreement involved in this case is, on its face, neither excessive nor unreasonable. See Matter of Fee Agreement of Smith, 4 Vet. App. at 492. Consequently, the Board concludes that the requirements for payment of the attorney's fee by VA from past-due benefits relating to the grant of increased compensation from 30 to 100 percent for paranoid schizophrenia are met concerning the past-due benefits. Past-due benefits is defined in 38 C.F.R. § 20.609(h)(3) as [a] nonrecurring payment resulting from a benefit, or benefits, granted on appeal or awarded on the basis of a claim reopened after a denial by the Board . . . or the lump sum payment which represents the total amount of recurring cash payments which accrued between the effective date of the award, as determined by applicable laws and regulations, and the date of the grant of the benefit by the agency of original jurisdiction, the Board . . ., or an appellate court. In this case, the proper amount of the past-due benefits is the lump sum payment representing the total amount of recurring cash payments, stemming from the issue of increased compensation for paranoid schizophrenia that accrued between the effective date of the award, i.e., August 26, 1991, and the date of the grant of the benefit by the RO, i.e., July 12, 1999. Thus, the attorney is entitled to payment of 20 percent of the amount of the award for increased compensation from 30 to 100 percent, accrued between those two dates. See 38 C.F.R. § 20.609(h)(3)(i) (1999). Payment of monetary benefits based, as here, on an award of increased compensation may not be made for any period prior to the first day of the calendar month following the month in which the award became effective. See 38 U.S.C.A. § 5111(a) (West 1991); 38 C.F.R. § 3.31 (1999). Hence, the actual payment of monetary benefits was effective from September 1, 1991, as the veteran and his attorney were advised by the previously noted correspondence from the RO. ORDER Eligibility for payment directly by VA to the veteran's attorney is established, and the attorney should be paid 20 percent of the veteran's past-due benefits awarded the veteran for the grant of increased disability compensation for service-connected chronic paranoid schizophrenia, from 30 to 100 percent, from the effective date of August 26, 1991, to July 12, 1999. S. L. KENNEDY Member, Board of Veterans' Appeals