Citation Nr: 0006611	
Decision Date: 03/10/00    Archive Date: 03/17/00

DOCKET NO.  00-03 054	)	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 January 1978 to 
January 1981.

In a February 1992 rating decision, the Regional Office (RO) 
determined that an evaluation in excess of 10 percent was not 
warranted for pseudofolliculitis barbae, that a compensable 
evaluation for chondromalacia of the left patella was not 
warranted, and that new and material evidence had not been 
presented to reopen a claim of entitlement to service 
connection for a right knee disorder.  In a June 1994 
decision, the Board of Veterans' Appeals (Board) remanded the 
case to the Department of Veterans Affairs (VA) Waco, Texas 
RO for additional development of the record.  

In a December 1998 decision, the Board denied the veteran's 
claim of entitlement to an evaluation in excess of 10 percent 
for pseudofolliculitis barbae and reopened the veteran's 
claim of entitlement to service connection for a right knee 
disorder.  The Board also remanded the case to the RO for 
additional development of the issues of entitlement to 
service connection for a right knee disorder and an increased 
rating for chondromalacia of the left patella.

The veteran appealed the December 1998 Board decision to 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").  In March 1999, the Court 
issued an order remanding the issue of entitlement to an 
evaluation in excess of 10 percent for pseudofolliculitis 
barbae to the Board.  

In a July 1999 decision, the Board remanded the issue of 
entitlement to an evaluation in excess of 10 percent for 
pseudofolliculitis barbae to the RO for additional 
development.  In an August 1999 rating decision, the RO 
determined that a 30 percent evaluation was warranted for 
pseudofolliculitis barbae, effective from May 6, 1999.  In 
September 1999, the veteran filed a notice of disagreement as 
to the effective date of the award of a 30 percent evaluation 
for pseudofolliculitis barbae.  In an October 1999 decision, 
the Board determined that the criteria for a valid fee 
agreement between the veteran and the attorney had been met 
with respect to the claim of entitlement to an evaluation in 
excess of 10 percent for pseudofolliculitis barbae.  The 
Board granted an attorney fee amounting to 20 percent of 
past-due benefits awarded for the period of May 6, 1999 to 
August 4, 1999, resulting from the grant of a 30 percent 
disability evaluation for pseudofolliculitis barbae from June 
1, 1999.  

In a November 1999 decision, the RO awarded entitlement to an 
earlier effective date for a 30 percent evaluation for 
pseudofolliculitis barbae, effective from January 21, 1992.



FINDINGS OF FACT

1.  In a February 1992 rating decision, the RO determined 
that an evaluation in excess of 10 percent was not warranted 
for pseudofolliculitis barbae, that a compensable evaluation 
for chondromalacia of the left patella was not warranted, and 
that new and material evidence had not been presented to 
reopen a claim of entitlement to service connection for a 
right knee disorder.  The veteran filed a notice of 
disagreement with the decision in June 1992.  

2.  In a December 1998 decision, the Board determined that an 
evaluation in excess of 10 percent was not warranted for 
pseudofolliculitis barbae, reopened the veteran's claim of 
entitlement to service connection for a right knee disorder 
and remanded the case to the RO for additional development of 
the issues of service connection for a right knee disorder 
and entitlement to a compensable evaluation for 
chondromalacia of the left patella.  

3.  The veteran subsequently retained the services of a 
private attorney to provide legal services with respect to 
his claim; the attorney was retained on December 12, 1998 and 
notified the Board of his representation of the veteran in 
December 1998.  

4.  Pursuant to the written agreement signed by the veteran 
in December 1998, the attorney agreed to provide legal 
services on a contingency basis of 20 percent of past-due 
benefits awarded, to be paid by VA directly to the attorney, 
based upon the favorable resolution of the veteran's claims.

5.  The attorney provided legal services with respect to the 
veteran's claim of entitlement to an evaluation in excess of 
10 percent for pseudofolliculitis barbae.

6.  In an August 1999 rating decision, the RO determined a 30 
percent disability evaluation was warranted for 
pseudofolliculitis barbae, effective May 6, 1999.  The award 
resulted in past-due benefits payable to the veteran.

7.  In an October 1999 decision, the Board found that the 
criteria for a valid fee agreement had been met with respect 
to the claim of entitlement to an evaluation in excess of 10 
percent for pseudofolliculitis barbae and that an attorney 
fee amounting to 20 percent of past-due benefits was payable 
for the period of May 6, 1999 to August 4, 1999, resulting 
from the grant of a 30 percent disability evaluation for 
pseudofolliculitis barbae from June 1, 1999.  

8.  In a November 1999 rating decision, the RO determined 
that an effective date of January 21, 1992 was warranted for 
the 30 percent disability evaluation for pseudofolliculitis 
barbae.  The award resulted in past-due benefits payable to 
the veteran.  



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 claim of 
entitlement to an evaluation in excess of 10 percent for 
pseudofolliculitis barbae.  38 U.S.C.A. § 5904 (West 1991 & 
Supp. 1998); 
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 of 
January 21, 1992 to November 17, 1999, resulting from the 
grant of a 30 percent disability evaluation for 
pseudofolliculitis barbae from February 1, 1992.  38 U.S.C.A. 
§ 5904(d) (West 1991 & Supp. 1999).



REASONS AND BASES FOR FINDINGS AND CONCLUSIONS

Factual Background

A review of the record reflects that in a February 1992 
rating decision, the RO denied the veteran's claims for an 
evaluation in excess of 10 percent for pseudofolliculitis 
barbae and a compensable rating for chondromalacia of the 
left patella, and determined that new and material evidence 
had not been presented to reopen a claim of entitlement to 
service connection for a right knee disorder.  The veteran 
filed a timely notice of disagreement in March 1992.  A 
timely substantive appeal was filed in October 1992.

In a June 1994 decision, the Board remanded the issues of 
entitlement to an evaluation in excess of 10 percent for 
pseudofolliculitis barbae and a compensable evaluation for 
chondromalacia of the left patella as well as the issue of 
whether new and material evidence had been presented to 
reopen a claim of entitlement to service connection for a 
right knee disorder to the RO for further development.  In a 
February 1995 rating decision, the RO, in pertinent part, 
granted a 10 percent disability evaluation for chondromalacia 
of the left patella and determined that an evaluation in 
excess of 10 percent for pseudofolliculitis barbae was not 
warranted.

In a December 4, 1998 decision, the Board determined that an 
evaluation in excess of 10 percent for pseudofolliculitis 
barbae was not warranted.  The Board also reopened the 
veteran's claim of entitlement to service connection for a 
right knee disorder and remanded the case to the RO for 
additional development of the issues of entitlement to 
service connection for a right knee disorder and an 
evaluation in excess of 10 percent for chondromalacia of the 
left patella.  

The veteran subsequently retained the services of a private 
attorney.  The Board received a copy of the attorney fee 
agreement between the veteran and his attorney on December 
21, 1998.  The Board also received a cover letter stating 
that the December 1998 Board decision had been appealed and 
that a copy of the attorney fee agreement had been filed with 
the Court and served upon VA's Office of General Counsel.  
Pursuant to the written agreement signed by the veteran on 
December 12, 1998, the veteran retained a private attorney to 
provide legal services on a contingency basis of 20 percent 
of past-due benefits awarded, to be paid by VA directly to 
the attorney.

In a January 1999 letter to the RO, the attorney submitted a 
VA document entitled Appointment of Attorney or Agent as 
Claimant's Representative and a request for a copy of the 
veteran's claims folder.  

In March 1999, the veteran's attorney and the General Counsel 
of VA filed a Joint Motion for Remand of One Issue, For 
Dismissal of the Remaining Two Issues, and to Stay Further 
Proceedings.  The parties requested the Court to issue an 
order remanding the December 4, 1998 Board decision to the 
extent it denied entitlement to an evaluation in excess of 10 
percent for pseudofolliculitis barbae.  The parties also 
requested the Court to stay further proceedings and it was 
noted that the Court did not have jurisdiction to review the 
non-final Board decision remanding other issues.  

In a May 1999 decision, the Court vacated that part of the 
December 1998 Board decision that denied entitlement to an 
evaluation in excess of 10 percent for pseudofolliculitis 
barbae and remanded the matter to the Board.  

In a July 1999 decision, the Board remanded the issue of 
entitlement to an evaluation in excess of 10 percent for 
pseudofolliculitis barbae to the RO for a VA examination and 
additional development of the record.

In an August 1999 decision, the RO determined that a 30 
percent disability evaluation was warranted for 
pseudofolliculitis barbae, effective May 6, 1999.

In an August 1999 letter, the RO informed the veteran that he 
was entitled to the payment of benefits from June 1, 1999.  
It was noted that his past-due benefits had been calculated 
as $844.00.  It was also noted that the maximum attorney fee 
payable, 20 percent of past-due benefits, computed as 
$168.80, had been withheld pending a determination by the 
Board of eligibility for the payment of attorney fees from 
such past-due benefits.  

In September 1999, the veteran filed a notice of disagreement 
as to the effective date assigned for the 30 percent 
evaluation for pseudofolliculitis barbae.  

In an October 1999 decision, the Board determined that the 
criteria for a valid fee agreement between the attorney and 
the veteran had been met with respect to the claim of 
entitlement to an evaluation in excess of 10 percent for 
pseudofolliculitis barbae.  An attorney fee amounting to 20 
percent of past-due benefits was awarded from past-due 
benefits for the period of May 6, 1999 to August 4, 1999, 
resulting from the grant of a 30 percent disability 
evaluation for pseudofolliculitis barbae from June 1, 1999.

In a November 1999 rating decision, the RO determined that an 
effective of January 21, 1992 for the grant of a 30 percent 
evaluation for pseudofolliculitis barbae was warranted.  The 
RO noted that the veteran's claim for an increased evaluation 
had been filed on January 21, 1992.

In a December 1999 letter, the RO informed the veteran that 
he was entitled to the payment of benefits from February 1, 
1992.  It was noted that his maximum past-due benefits had 
been calculated as $17,990.80.  It was also noted that the 
maximum attorney fee payable, 20 percent of past-due 
benefits, computed as $3,598.16, 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.  VAOPGCPREC 18-92, 57 
Fed. Reg. 49747 (1992); 38 C.F.R. § 20.1100(b) (1999).

Analysis

The Board determined in an October 1999 decision that the 
criteria for a valid fee agreement between the attorney and 
the veteran for representational services before VA and the 
Board had been met with respect to the claim of entitlement 
to an evaluation in excess of 10 percent for 
pseudofolliculitis barbae.  The Board also determined in that 
same decision that an attorney fee amounting to 20 percent of 
past-due benefits was payable from past-due benefits for the 
period of May 6, 1999 to August 4, 1999, resulting from the 
grant of a 30 percent disability evaluation for 
pseudofolliculitis barbae from June 1, 1999.  

The record reflects that shortly after the Board issued the 
October 1999 decision, the RO determined that an effective 
date of January 21, 1992 was warranted for the grant of a 30 
percent evaluation for pseudofolliculitis barbae.  Thus, the 
only change in the facts of this case since the Board's 
October 1999 decision is the effective date of the award of 
past-due benefits.  The Board finds that the effective date 
of an evaluation in excess of 10 percent was an inchoate 
issue in terms of 
38 U.S.C.A. § 5904(c) and (d) in the July 1999 Board decision 
and the August 1999 RO decision, in that it never would have 
emerged but for those decisions.  The Board is unable to 
conclude that the decision in Grantham v. Brown, 114 F.3d
1156 (Fed.Cir. 1997) is a bar to payment of fees arising from 
the revised effective date of the award.  If the rule in 
Grantham were so extended, then the "effective date" would be 
a separate claim and thus outside the scope of the existing 
fee arrangement.  The effect would be to vitiate the purpose 
of 38 U.S.C.A. §  5904.
  
Thus, once again the Board finds that the December 4, 1998 
"final decision" addressed the issue of entitlement to an 
evaluation in excess of 10 percent for pseudofolliculitis 
barbae.  The notice of disagreement which preceded the 
Board's decision was received by the RO after November 18, 
1988.  The attorney fee agreement reflects the attorney was 
retained not later than one year following the date of the 
Board's promulgation of the underlying decision.  Therefore, 
the criteria under which attorney fees may be charged have 
been met.

In considering whether the attorney may be paid a fee 
directly by VA from past-due benefits awarded the veteran, 
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 Board finds that the contingency fee agreement executed 
by both the veteran and his attorney was signed by the 
parties on December 12, 1998 and by definition, the payment 
of the 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 November 1999 rating 
decision established a 30 percent disability evaluation for 
pseudofolliculitis barbae, effective from January 21, 1992. 

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 
attorney was in substantial compliance with the provisions of 
38 C.F.R. § 20.609(g) and (h). 

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, 
state 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.  Thus, 
the Board concludes that the fee agreement provided for a 
total fee payable to the attorney that did not exceed 20 
percent of past-due benefits awarded on the basis of the 
claim, in compliance with the provisions of 38 U.S.C.A. 
§ 5904(d) and 38 C.F.R. § 20.609(h).  The attorney's expenses 
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 November 1999 RO decision, the effective date 
of the grant of a 30 percent disability evaluation for 
pseudofolliculitis barbae is January 21, 1992.  In light of 
this, the inclusive dates for the purpose of entitlement to 
attorney fees based on the veteran's receipt of a 30 percent 
disability evaluation for pseudofolliculitis barbae are 
January 21, 1992 to November 17, 1999 (the date of the rating 
decision granting the benefit).  

Finally, the Board is cognizant of the ongoing nature of the 
veteran's appeal, as noted in the Introduction section above.  
Notably, the issues of entitlement to service connection for 
a right knee disorder and entitlement to an increased 
evaluation for chondromalacia of the left patella remain on 
appeal.  Since the veteran could potentially be awarded 
additional past-due benefits in the future with respect to 
those claims, the Board is compelled to clarify that the 
impact of this decision is limited exclusively to eligibility 
for attorney fees from past-due benefits awarded prior to 
this decision.  It is not intended to affect future Board 
dispositions, if any, of the eligibility for the payment of 
additional attorney fees from any future award of past-due 
benefits resulting from subsequent decisions rendered in any 
ongoing appeal.




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 a 30 
percent disability evaluation for pseudofolliculitis barbae 
for the period from January 21, 1992 to November 17, 1999.  



		
	John E. Ormond, Jr.
Member, Board of Veterans' Appeals