Citation Nr: 0003890 Decision Date: 02/15/00 Archive Date: 02/23/00 DOCKET NO. 00-00 692 ) 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 veteran served on active duty from October 1966 to September 1968. 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 pursuant to 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 December 1999, and were advised therein that they were to submit any evidence or argument concerning this matter directly to the Board within 30 days. No additional evidence or argument has been received by the Board. In a September 1997 rating decision, the Department of Veterans Affairs (VA) Waco, Texas Regional Office (RO) denied entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate. The veteran filed a timely notice of disagreement and substantive appeal. In a September 30, 1999 decision, the Board granted entitlement to a 40 percent disability evaluation for postoperative residuals of adenocarcinoma of the prostate. The veteran was subsequently awarded past-due benefits in an October 1999 rating decision. The Board notes that in October 1999, the veteran moved to reopen his claims entitlement to service connection for skin cancer, bilateral hernias, tinnitus, loss of hearing, and bilateral testicular atrophy. These matters are referred to the RO for any appropriate action deemed necessary. FINDINGS OF FACT 1. In a September 30, 1999 decision, the Board granted entitlement to a 40 percent disability evaluation for postoperative residuals of adenocarcinoma of the prostate. 2. The notice of disagreement which preceded the Board's September 30, 1999 decision was received in September 1997. 3. The attorney was retained by the veteran prior to the Board's September 30, 1999 decision. 4. Following the Board's September 30, 1999 decision, the attorney did not render any legal services on behalf of the veteran before VA in relation to the issue of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate. CONCLUSIONS OF LAW 1. The criteria for charging a fee for any legal services are not met prior to September 30, 1999. 38 U.S.C.A. § 5904(c) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c) (1999). 2. The criteria for charging a fee for services related to the issue of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate are met from September 30, 1999. 38 U.S.C.A. § 5904(c) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c) (1999). 3. A fee greater than $0.00 for services rendered after September 30, 1999, related to the issue of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate, is excessive and unreasonable. 38 U.S.C.A. § 5904(c)(2) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(e), (f) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Factual Background A review of the record reflects that in a September 1997 rating decision, the RO denied entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate. The veteran filed a notice of disagreement in September 1997. A timely substantive appeal was filed in December 1997. In February 1998, the RO and the Board received a copy of a fee agreement executed by the veteran and the attorney. The fee agreement, which was executed on February 16, 1998, provided 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. The fee agreement also contains the veteran's VA claims file number. In May 1998, the RO and the Board received a copy of an amended fee agreement dated May 5, 1998, between the veteran and the attorney. The amended fee agreement is identical to the February 1998 fee agreement with the exception that it specifically specifies the attorney as the veteran's representative instead of a law firm. In a September 30, 1999 decision, the Board granted entitlement to a 40 percent evaluation for postoperative residuals of adenocarcinoma of the prostate. In an October 27, 1999 rating decision, the RO implemented the Board's decision and awarded a 40 percent disability evaluation for postoperative residuals of adenocarcinoma of the prostate, effective November 7, 1996. In a December 1999 letter, the RO informed the veteran that he was entitled to the payment of benefits from December 1, 1996. It was noted that his past-due benefits had been calculated as $10,600.00. It was also noted that the maximum attorney fee payable, 20 percent of past-due benefits, computed as $2,120.00, had been withheld pending a determination by the Board of eligibility for the payment of attorney fees from such past-due benefits. Pertinent Law and Regulations 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. VA Op. G.C. Prec. No. 18-92, 57 Fed. Reg. 49747 (1992); 38 C.F.R. § 20.1100(b) (1999). 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") has specifically held that a fee may not be charged, allowed, or paid for services of agents and attorneys with respect to services provided before the date on which the Board first makes a final decision in the case. See 38 U.S.C.A. § 5904(c)(1); In the Matter of the Fee Agreement of Smith, 4 Vet. App. 487, 490 (1993); see also, In the Matter of the Fee Agreement of Stanley, 10 Vet. App. 104 (1997). In a typical case, after the Board has denied a claim, the claimant at that point hires an attorney to prepare an appeal to the Court or initiate new proceedings at the VA level such as a request for reconsideration of the Board denial or the filing of another claim or a claim to reopen. If an attorney has already been retained, his or her services are rendered on a pro bono basis until the date of the Board decision. A fee may be charged for all services subsequently rendered on the same issue. See Stanley, 10 Vet. App. 104 (1997). If benefits are later awarded, through adjudication at any level, reasonable attorney fees may be charged. The expenses of an attorney representing a veteran are separate from the matter of attorney fees. The veteran may be charged for the reasonable expenses incurred in the representation. 38 U.S.C.A. § 5904; 38 C.F.R. § 20.610 (1999). A review of the attorney fee agreement entered into between this veteran and the attorney reveals that the types of expenses contemplated by the framers of 38 U.S.C.A. § 5904 and 38 C.F.R. § 20.610 appear to be referred to as "costs" under the terms of the fee agreement. The Board also observes that the costs for which the veteran is responsible under the agreement are well delineated in the fee agreement. Factors to be considered in evaluating the reasonableness of a fee are set forth at 38 C.F.R. § 20.609(e) and include the following: (1) The extent and type of services the representative performed; (2) The complexity of the case; (3) The level of skill and competence required of the representative in giving the services; (4) The amount of time the representative spent on the case; (5) The results the representative achieved, including the amount of any benefits received; (6) The level of review to which the claim was taken and the level of the review at which the representative was retained; (7) The rates charged by other representatives for similar services; and (8) Whether, and to what extent, the payment of fees is contingent upon the results achieved. Analysis A review of the record reflects that the attorney has now met the requirements to charge a fee concerning the issue of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate. In a September 30, 1999 decision, the Board granted entitlement to a 40 percent disability evaluation for postoperative residuals of adenocarcinoma of the prostate. That Board decision meets the first requirement for charging a fee because it represents a final decision. The second element is also met, as the notice of disagreement that preceded this decision was filed in September 1997. Additionally, the third element is met as the attorney was retained by the veteran prior to the Board's September 30, 1999 decision. Following a thorough review of the veteran's claims file and the applicable laws, regulations, and precedent decisions, the Board is of the opinion that at least a prima facie eligibility to charge an attorney fee subsequent to the final September 30, 1999 Board decision, which granted entitlement to a 40 percent disability evaluation for postoperative residuals of adenocarcinoma, has been satisfied in this case. The Board must now consider the reasonableness of the fee agreement. As previously noted, a fee may not be charged, allowed, or paid for services of an attorney provided before the date on which the Board makes a final decision in a case. Thus, a fee in this action may not be charged, allowed, or paid for services rendered by the attorney prior to September 30, 1999. In analyzing the reasonableness of the fee charged under the criteria set forth in 38 C.F.R. § 20.609(e), the Board observes that several of these factors cannot be evaluated based on the evidence currently of record. For example, the attorney has not reported the amount of time spent on the veteran's case. The Board also does not have information concerning the rates charged by other representatives for similar services. Other factors cannot be considered based on complete or direct information, although there is information in the record that can be used indirectly. For example, some of the services performed by the attorney may be inferred from his correspondence-or lack thereof-to the RO after the Board's decision. In the present case the record does not demonstrate that the attorney rendered any services on the veteran's behalf concerning the issue of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate after the Board's September 30, 1999 decision. Thus, because no representation was rendered after the Board's final decision, any fee charged therefore would have to be unreasonable. As to the elements of the results the attorney achieved, including the amount of any benefit money recovered and the level of review to which the claim was taken after the Board's final decision, the entire amount of benefits was recovered as a result of the Board's final decision, not as a result of any services rendered by the attorney thereafter. Additionally, the claim was not taken to any further level of review, such as the United States Court of Appeals for Veterans Claims. The Board acknowledges that as a result of the attorney's representation, he achieved a monetary benefit for his client, the veteran. Nonetheless, the Board observes that the only retroactive benefit paid to the veteran involved work that the attorney performed prior to the date of the Board's final decision and was thus, work for which he cannot charge a fee under the applicable law and regulations. Therefore, the Board has no choice but to conclude that to charge the veteran any fee over $0.00 is unreasonable and excessive under the governing law and regulation. Pursuant to 38 C.F.R. § 20.609(i), as a reduction in the fee is ordered, the attorney must credit the account of the veteran with the amount of the reduction and refund any payment made for attorney fees on the account to the veteran not later than the expiration of the time within which this ruling may be appealed to the Court. As previously noted, expenses incurred in connection with the attorney's representation of the veteran are separate and allowable under 38 U.S.C.A. § 5904; 38 C.F.R. § 20.610. The attorney's failure to refund any attorney fees paid by the veteran may result in proceedings under 38 C.F.R. § 14.633 (1999) to terminate the attorney's right to practice before VA and the Board and/or prosecution under the provisions of 38 U.S.C.A. § 5905 (West 1991). ORDER No fee may be charged for services rendered prior to September 30, 1999 related to the claim of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate. As to services rendered after September 30, 1999 related to the claim of entitlement to a compensable evaluation for postoperative residuals of adenocarcinoma of the prostate, any fee in excess of $0.00 is unreasonable. The fee is reduced to $0.00. Any amount in excess of $0.00 received by the attorney for fees for services before VA must be refunded to the veteran. John E. Ormond, Jr. Member, Board of Veterans' Appeals