Citation Nr: 0006624 Decision Date: 03/13/00 Archive Date: 03/17/00 DOCKET NO. 00-00 037 ) DATE ) ) THE ISSUE Eligibility for payment of attorney fees from past due benefits arising from a February 1998 Board decision which restored a compensable rating for service-connected irritable bowel syndrome. ATTORNEY FOR THE BOARD K. Parakkal, Counsel INTRODUCTION The veteran served on active duty from June 1968 to June 1970. This matter relating to attorney fees is before the Board of Veterans' Appeals (Board) following proceedings at the RO relating to a claim by the veteran for VA benefits. In the instant case, the claimant, L.C.F., is an attorney who was retained by the veteran on July 9, 1996. The RO notified both the veteran and his attorney by a December 9, 1999, letter that the case was being transferred to the Board for a determination concerning the attorney's eligibility for payment of attorney fees from past-due benefits. They were advised that any additional evidence or argument should be submitted to the Board within 30 days. No response was received from the veteran or his attorney. FINDINGS OF FACT 1. By a September 29, 1995, Board decision, the veteran's claim for restoration of a compensable rating for service- connected irritable bowel syndrome was denied. 2. The original notice of disagreement (NOD) for this claim was received after November 18, 1988. 3. The veteran retained the attorney, L.C.F., on July 9, 1996, within 1 year after the September 29, 1995, Board decision. 4. The fee agreement signed by the parties on July 9, 1996, provides for payment to the attorney of a contingency fee consisting of 20 percent of past-due benefits awarded to the veteran, such fee is to be paid by VA from past-due benefits. 5. The attorney rendered legal services involving the veteran's claim. 6. In a February 24, 1998, decision, the Board restored a compensable rating for the veteran's service-connected irritable bowel syndrome. 7. Past-due benefits are available to the veteran as a result of a February 24, 1998, Board decision which restored a compensable rating for service-connected irritable bowel syndrome. CONCLUSIONS OF LAW 1. The criteria for a valid fee agreement between the attorney and the veteran as to VA representation have been met with respect to the claim for restoration of a compensable rating for service-connected irritable bowel syndrome. 38 U.S.C.A. § 5904(c)(1) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c) (1999). 2. The fee specified in the agreement as being payable directly to the attorney in the amount of 20 percent of past- due benefits awarded to the veteran is presumed to be reasonable and may be paid from past-due benefits created by a favorable adjudication of the claim for restoration of a compensable rating for the veteran's service-connected irritable bowel syndrome. 38 U.S.C.A. § 5904(d) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(f), (g), (h) (1999). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS I. Factual Background By an April 1992 decision, the RO reduced the veteran's disability rating from 10 to 0 percent for service-connected irritable bowel syndrome. In July 1992, the veteran filed a NOD with respect to the April 1992 RO decision. He was furnished with a statement of the case and he later filed a timely substantive appeal. By a September 25, 1995, Board decision, the veteran's claim for restoration of a compensable rating for service-connected irritable bowel syndrome was denied. An agreement, dated on July 9, 1996, shows that the veteran hired L.C.F. to provide legal services in connection with his appeal to the Court and in connection with all proceedings for benefits before VA. In December 1996, the veteran and the attorney signed an addendum to their July 1996 fee agreement. In the addendum, it was noted that the veteran authorized the attorney to pursue an award under the Equal Access to Justice Act (EAJA). It was also noted that if EAJA fees were awarded such would be offset by any awarded past-due benefits. By a February 24, 1998, Board decision, restoration of the veteran's service-connected irritable bowel syndrome was granted, effective from November 27, 1990; and in November 1999, the RO effectuated the Board's decision. In December 1999, the RO sent a letter to the veteran and L.C.F., indicating that 20 percent of the maximum amount of the veteran's past-due benefits was $3,567.60 and that such was being withheld as the maximum attorney fee payable pending a determination by the Board. II. Legal Analysis The Veterans Judicial Review Act (VJRA, Public Law 100-687, 102 Stat. 4105 (1988)) allows VA claimants to enter into agreements with attorneys and agents for the payment of fees for services in representing them in VA proceedings, provided that the fees are neither "unreasonable" nor "excessive." Before enactment of the VJRA, the fees which could lawfully be charged by attorneys and accredited agents in VA proceedings had been limited to $10 since the 1860's. See Walters v. National Association of Radiation Survivors, 473 U.S. 305 (1985). A fee may now be charged if, and only 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 before the date on which the Board first makes a final decision on the case. 38 U.S.C.A. § 5904(c)(1) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c)(1) (1999). (2) The Notice of Disagreement which preceded the Board decision with respect to the issue, or issues, involved must have been received by the RO on or after November 18, 1988. VJRA § 403, 102 Stat. 4122; 38 C.F.R. § 20.609 (c) (2) (1999). (3) The attorney at law or agent must have been retained not later than one year following the date on which the decision of the Board with respect to the issue, or issues, involved was promulgated. 38 U.S.C.A. § 5904(c)(1) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c)(3) (1999). On September 25, 1995, the Board issued a final decision denying the veteran's claim for restoration of a compensable rating for service-connected irritable bowel syndrome. The NOD which preceded such Board decision was received by the RO, in July 1992, well after the November 18, 1988 deadline. On July 9, 1996, the veteran and the attorney, L.C.F., executed a contract by which the attorney was retained to provide legal services in connection with the veteran's VA claim. As such, the statutory requirements for recognition of the fee agreement for VA purposes have been met. 38 U.S.C.A. § 5904(c)(1) (West 1991 & Supp. 1999); 38 C.F.R. § 20.609(c) (1999). The law specifies that the total fee payable to an attorney may not exceed 20 percent of the total amount of any past-due benefits awarded in the veteran's claim. 38 U.S.C.A. § 5904(d) (West 1991 & Supp. 1999). Fees totaling no more than 20 percent of any past-due amounts are presumed to be reasonable. 38 C.F.R. § 20.609(f) (1999). The attorney fee agreement executed between the veteran and the attorney, L.C.F., satisfies these criteria. In preparation for referral of the attorney fee issue to the Board, the RO made preliminary calculations of the dollar amount of past-due compensation payable to the veteran and of the portion potentially payable to the attorney following the February 24, 1998, Board decision which resulted in the creation of past-due benefits. These figures were furnished to the parties in the notification letter of December 9, 1999. The RO established payment for past-due benefits, effective from December 1, 1990, and such is the proper effective date for the commencement of payment of past-due benefits as it is the first day of the calendar month following the month in which restoration of the compensable service-connected irritable bowel syndrome became effective. Calculation by the RO of the amount of past-due benefits created by the restoration of a compensable rating for irritable bowel syndrome must also comply with the provisions of 38 C.F.R. § 20.609(h)(3) (1999), which state that the termination date of the period of past-due benefits for attorney fee purposes is the date of the award, not the last day of the month of the award. The regulation specifies as follows: "past-due benefits" means a non- recurring payment resulting from a benefit, or benefits, granted on appeal or awarded on the basis of a denial by the Board of Veterans' Appeals 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 of Veterans' Appeals, or an appellate court. In the instant case, the proper termination date of past-due benefits is the date of the Board decision which restored a compensable rating for service-connected irritable bowel syndrome-February 24, 1998. As it appears that a termination date in November 1999 was improperly chosen, the amount payable as attorney fees will have to be revised. The RO is hereby instructed that the period of past-due benefits, resulting from restoration of a compensable rating for service-connected irritable bowel syndrome, extends from December 1, 1990, through February 24, 1998. Fees Paid Pursuant to the Equal Access to Justice Act (EAJA). It is not apparent from the record whether the attorney has received EAJA fees or not. 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.A. § 2412 (d) (1)(A) (1988). In the Federal Courts Administration Act of 1992 (FCAA), Congress made EAJA applicable to VA adjudicative actions by including the United States Court of Veterans Appeals (Court) within the definition of "court" in 28 U.S.C.A. § 2412 (d) (2) (f); Pub. L. No. 102-572, § 506 (a) (Oct. 29, 1992). In an opinion binding on the Board, the VA General Counsel concluded that § 506(c) of the FCAA expressly provided 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. § 2412, that the claimant's attorney must refund to the claimant the amount of the smaller fee. VAOGCPREC 12-97 (March 26, 1997). The award under § 5904(b) allows the veteran's attorney to collect his fee out of the veteran's past-due benefits, while the EAJA award is paid by the Government to the veteran to defray the cost of legal services. See Curtis v Brown, 8 Vet.App. 104, 108-9 (1995) and Russell v. Sullivan, 930 F.2nd 1443, 1446 (9th Cir. (1991). The EAJA award therefore serves as a reimbursement to the veteran for fees paid of the past-due disability benefits. Accordingly, the veteran's attorney is permitted to seek recovery of attorney's fees under both 38 U.S.C.A. § 5904 and 28 U.S.C. § 2412. However, 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. If the claimant's attorney were to receive attorney fees under the EAJA for the same work as is covered by the contingency fee, he would have to refund the smaller of the fees received under either the EAJA or the fee received based on this current determination by the Board. The Board would not have the direct authority to order the veteran's attorney to make such payment. However, not to make such payment would be a violation of both professional conduct and a direct violation of the Federal Law under 38 U.S.C.A. § 5905 (West 1991 & Supp. 1999). ORDER Eligibility for direct VA payment to the attorney of fees for legal services rendered, in connection with the award of restoration of a compensable rating for service-connected irritable bowel syndrome is established. The attorney should be paid 20 percent of past-due benefits awarded the veteran for the period from December 1, 1990, to February 24, 1998. G. H. SHUFELT Member, Board of Veterans' Appeals