Rule2024-24708
Fee Reasonableness Reviews; Effect of Loss of Accreditation on Direct Payment
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 25, 2024
Effective
April 1, 2025
Issuing agencies
Veterans Affairs Department
Abstract
The Department of Veterans Affairs (VA) is issuing this final rule to address its process for reviewing, determining, and allocating reasonable fees for claim representation, and to address the effect on direct payment of the termination of a claims agent's or attorney's VA accreditation.
Full Text
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<title>Federal Register, Volume 89 Issue 207 (Friday, October 25, 2024)</title>
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[Federal Register Volume 89, Number 207 (Friday, October 25, 2024)]
[Rules and Regulations]
[Pages 85055-85064]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-24708]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 14
RIN 2900-AR93
Fee Reasonableness Reviews; Effect of Loss of Accreditation on
Direct Payment
AGENCY: Department of Veterans Affairs.
ACTION: Final rule.
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SUMMARY: The Department of Veterans Affairs (VA) is issuing this final
rule to address its process for reviewing, determining, and allocating
reasonable fees for claim representation, and to address the effect on
direct payment of the termination of a claims agent's or attorney's VA
accreditation.
DATES:
Effective date: This final rule is effective April 1, 2025.
Applicability date: The provisions of this final rule shall apply
to all fee allocation notices issued on or after the effective date of
this final rule.
FOR FURTHER INFORMATION CONTACT: Jonathan Taylor, Office of General
Counsel (022D), 810 Vermont Avenue NW, Washington, DC 20420, (202) 461-
7699. (This is not a toll-free telephone number.)
SUPPLEMENTARY INFORMATION: On December 21, 2023, VA published in the
Federal Register (88 FR 88,295) a proposed rule to address its process
for reviewing, determining, and allocating reasonable fees for claim
representation, and to address the effect on direct payment of the
termination of a claims agent's or attorney's VA accreditation. The
proposed rule allowed for a comment period ending on February 20, 2024.
During the comment period, VA received 15 comments, which are discussed
below. After considering these comments, VA has decided to finalize the
proposed rule without amendment.
Comments on Representatives and Fees Generally
One commenter stated that ``the tone of [VA's] proposal suggests
that attorney involvement in the [claims] process is part of some
problem.'' VA thanks the commenter for this comment, but, to be clear,
VA takes no issue with VA-accredited attorneys and claims agents
(hereinafter ``agents'') assisting claimants and recognizes the
important service they provide. But the fact of the matter is that
there has been an increase in multi-attorney and multi-agent cases and,
when those agents and attorneys request direct payment, VA needs an
efficient process to allocate fees in all those cases. This rule
provides such a process. And this rule's process will (1) empower
agents and attorneys to negotiate fees on their own and (2) deliver
fees to agents and attorneys more expeditiously (and benefits to
veterans more expeditiously). Those are not anti-attorney or anti-agent
measures or results.
Another commenter stated that fees should be a matter between a
veteran and representative, and that representatives should not get
fees from VA. VA thanks the commenter, but--to be clear--VA does not
pay representatives independently. VA only pays representatives (out of
a claimant's past-due benefits) when the claimant and the
representative have requested it. And, under this rule, VA will only
get involved with the question of fees when (1) direct payment is
requested or (2) a fee reasonableness review is requested or otherwise
warranted. Moreover, consistent with this commenter's general view on
fee matters, this rule sets forth reasonable default allocations that
will allow claimants and representatives to resolve fee matters on
their own in many cases. Nevertheless, if that effort is unsuccessful,
VA's Office of General Counsel (OGC) remains available to review and
decide a reasonable fee allocation for the case.
A third commenter stated that VA should ``require agents or
attorneys to
[[Page 85056]]
request a fee reasonableness review[ ] in order to receive direct
payment.'' VA appreciates this comment, but has not been provided
evidence of widespread acceptance of unreasonable fees that would
warrant such a drastic action of not releasing any fees absent
individualized review. Particularly given the workload burden that
approach would create, and the legal presumption of fee reasonableness
for certain agents or attorneys under 38 CFR 14.636(f)(1), VA declines
to implement that approach at this time.
VA makes no changes in response to these comments.
Comments on Unaccredited Companies and Upfront Fees
One commenter stated that the proposed rule was excellent, but
questioned how VA was dealing with unaccredited companies that charge
high fees to veterans. Another commenter similarly stated support for
limitations on fees, but was concerned about individuals and companies
charging upfront fees. A third commenter stated that VA needs to shut
down unaccredited companies that ``rob veterans, botch claims, and cost
vet[eran]s benefits.'' The commenter requested that VA refer these
companies to its Office of Inspector General (OIG) and the Department
of Justice (DOJ). A fourth commenter stated that VA should be taking
action against unaccredited actors, rather than further regulating
accredited agents and attorneys. The commenter stated that this rule
``creates more opportunity for unaccredited actors to enter this
space.''
The issues of unaccredited companies and upfront fees are beyond
the scope of this particular rulemaking. But they are issues VA is
actively pursuing in other realms, including coordination with OIG and
DOJ, and we do want to take this opportunity to reiterate the
following: No individual or organization that lacks VA accreditation
may charge any fee for preparation, presentation, or prosecution of a
VA benefits claim. 38 U.S.C. 5901. And no individual or organization
(even with accreditation) may charge a fee to a veteran for services on
a VA benefits claim prior to the initial decision on the claim. 38
U.S.C. 5904(c). Veterans can protect themselves against unaccredited
companies involved in predatory practices by only engaging with VA-
accredited representatives on VA benefits issues. Moreover, in view of
VA's oversight of and authority regarding accredited representatives,
veterans engaging with VA-accredited representatives can avail
themselves of the fee reasonableness process described in this rule if
they believe they are being charged an unreasonable fee.
As to the fourth commenter's allegation that this rule ``creates
more opportunity for unaccredited actors to enter this space,'' we do
not understand the basis for this allegation. To the extent the
allegation is related to VA's statement that including claimants in the
default allocation of Sec. 14.636(i)(1)(ii) ``accounts for the
possibility that the claimant may have entered into a non-direct pay
agreement with other agents or attorneys'' (88 FR at 88,296), that
statement is referring to accredited agents and attorneys, not
unaccredited actors, as confirmed by Sec. 14.636(b) (``Only accredited
agents and attorneys may receive fees from claimants . . . .'').
Alternatively, to the extent the allegation is based on the commenter's
belief that this rule ``could create'' a disincentive for accredited
agents or attorneys to represent claimants, we disagree with that
premise, as further explained below.
VA makes no change to this rule in response to these comments, but
nevertheless thanks the commenters for raising this important issue.
Comments on Declining Direct Payment for Agents or Attorneys Whose VA
Accreditation Has Been Terminated
One commenter expressed ``full support'' for VA's proposal to
decline direct payment for agents or attorneys who have had their
accreditation revoked (Sec. 14.636(h)(1)(iii)). Another commenter
agreed with such an approach, and applauded VA's efforts to strengthen
regulations that protect veterans and their dependents from
unreasonable fees. A third commenter, however, was concerned ``with the
impact this policy may have on those who voluntarily terminate their
accreditation due to illness or retirement.'' The commenter questioned
``whether these individuals will lose their fees or be forced to stay
accredited to receive earned fees even when they are no longer taking
on new clients.''
VA thanks each of the commenters on this issue. As to the last
commenter's question, under this rule, even though there will be no
direct payment for agents or attorneys whose VA accreditation has been
terminated, that does not mean they lose the right to previously-earned
fees or are forced to stay accredited to retain fee eligibility.
Rather, upon receipt of a fee allocation notice, if they believe they
deserve a fee from the award at issue, they can work out an arrangement
with the other parties or (if that is unsuccessful) can request an OGC
fee reasonableness review. In sum, while VA will no longer directly pay
agents or attorneys who have lost their accreditation, this rule still
allows those individuals to pursue a fee if they believe they have
earned one in the case.
VA makes no change in response to these comments.
Comments on Current Fee Reasonableness Wait Times
One commenter stated that their law firm has five cases that have
been pending fee reasonableness review since 2022, even though all the
attorneys on the case were from the same firm. A similar commenter
stated that they are currently waiting for a fee reasonableness
determination, there is no timeline for such a determination, and that
the process is haphazard. A third commenter stated that fee matters are
``often inexplicably and systematically delayed.'' A fourth commenter
described their ``unpleasant experience'' waiting over 430 days for a
fee reasonableness review that ``lacks any sort of transparent business
process.'' This commenter stated that the case was referred for a
reasonableness review simply because another attorney--who did not
represent the claimant at the Board of Veterans' Appeals (Board) and
now remained silent on the issue of fees--had represented the claimant
six years prior.
VA thanks these commenters. This rule has been designed to remedy
this issue and reduce fee reasonableness wait times. With the
institution of reasonable default allocation rules, there will be less
cases in the queue for a fee reasonableness review; thus, those cases
that warrant such review will receive a determination more promptly.
The first commenter's situation is an apt example. Under this rule, if
no party objects to the default allocation within 60 days, VA may
immediately release the fee to the successor attorney at the firm (or
split the fee, depending on which default allocation rule applies). See
38 CFR 14.636(i)(1)-(2). Parties will no longer have to wait for a fee
reasonableness review just because two attorneys represented the
claimant. The fourth commenter's situation is also instructive. Even
though another attorney provided representation six years prior, if no
party objects within 60 days, the commenter could receive the entire
fee shortly thereafter (assuming the Sec. 14.636(i)(1) default is
applicable). Moreover, the efficiency gains under this rule could also
free up OGC resources to implement business practices that better serve
the parties during the fee reasonableness process. Because this rule
remedies these
[[Page 85057]]
commenters' concerns, VA makes no change in response to the comments.
The fourth commenter further stated that the increase in fee
reasonableness case inventory was the result of VA's policy choice to
refer all direct-pay multi-attorney or multi-agent matters for a fee
reasonableness review without any opportunity for the parties to
resolve the matter on their own. We do not dispute that VA's policy to
refer to OGC all direct-pay multi-attorney/agent fee matters, in
conjunction with the rising number of multi-attorney/agent matters, has
been a factor for the increase. Because there was no rule setting forth
default allocations, VA had to refer all these cases for a
determination on how much to pay each agent or attorney. Now, however,
as stated in the preamble to the proposed rule, VA believes that the
best course forward is to establish default allocation rules, which
will allow veterans and representatives the opportunity to resolve fee
matters on their own in lieu of a fee reasonableness review. 88 FR at
88,295. We believe this approach accords with the commenter's view. VA
thanks the commenter and makes no change in response to the comment.
Comments on the Sec. 14.636(i)(1)(i) Default Allocation
One commenter expressed support for the default allocation for
cases involving a ``continuous'' agent or attorney, Sec.
14.636(i)(1)(i), stating that such an allocation ``incentivizes ethical
behavior and the high quality representation that our Veterans
deserve.'' The commenter stated that there is an ``unethical (but sadly
widespread) practice wherein a representative submits a few documents
on behalf of a client, drops representation of that client, and then
sits back and collects fees for the next 5-10 years based on the work
done by subsequent representatives or by the Veteran on his [or her]
own.'' According to the commenter, this default properly prioritizes
``protecting honest Veterans from unscrupulous representatives'' and
``encouraging ethical and responsible legal representation of
Veterans'' over certain representatives' attempts ``to collect fees
from awards granted to Veterans long after their representation ends.''
A second commenter, however, expressed concern with this default
allocation, stating that a discharged agent or ``attorney can spend
years developing evidence, submitting argument, consulting with and
advising a client, and investing other resources on a case. . . . VA
would entirely ignore all these services and simply award the fee to
the `continuous' agent or attorney.''
VA thanks both commenters for their comments. We agree with several
of the points made by the first commenter. As to the second commenter's
concern, we acknowledge that there are situations where the discharged
\1\ agent or attorney performed more valuable services for the claim
than the continuous agent or attorney; there are also situations where
the continuous agent or attorney performed the more valuable services.
Accordingly, we structured the default allocation to be nothing more
than an initial baseline: If the discharged agent or attorney (or the
claimant) disagrees with the default in a given case, the parties have
a 60-day window to resolve the matter on their own--and, if an
agreement cannot be reached, OGC reasonableness review is available.\2\
But the efficiency gain of a default is that--if no party has an issue
with the continuous agent or attorney receiving the fee, or if the
parties reach an agreement on their own as to how they will re-allocate
the fee after its release--that is the end of the matter and OGC will
not have to adjudicate a case that no party has asked it to resolve.
Accordingly, VA makes no change in response to these comments.
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\1\ Herein, ``discharged'' refers to representatives who were
either discharged or withdrew from the representation prior to the
award of benefits.
\2\ As merely an initial baseline, the default has no effect
once a party requests OGC review. 88 FR at 88,296.
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Comments on the Sec. 14.636(i)(1)(ii) Default Allocation
One commenter expressed concern with the default allocation for
cases where all agents and attorneys have been discharged, Sec.
14.636(i)(1)(ii), stating that ``VA would treat both attorneys equally,
even if the latter performed only minimal work.'' VA thanks the
commenter for the comment, but, again, the default allocation is just
an initial baseline; if any party believes the default split is not
reasonable in a given case, the parties can work out on their own how
to re-allocate the fee after receipt or (if that effort proves
unsuccessful) request OGC review. The default is not there to assume
that all cases with discharged agents or attorneys involve equal work
by those agents or attorneys; it is there to provide a generally
reasonable baseline that will be satisfactory to the parties in many
circumstances and will enable OGC to focus its resources on those cases
where a party has affirmatively expressed a desire for OGC review.
Another commenter recalled a situation in which their client was
``unknowingly solicited to sign a new [representation] agreement'' with
another entity, such that they subsequently had to re-establish
representation of the client. The commenter stated that, under this
rule, the ``soliciting entity could have received an equal split'' or
``I may have been boxed out of my fees,'' i.e., ``my years of work may
have been thrown away or allocated out by default because a different
or multiple representatives could have existed on decision day.'' VA
thanks the commenter, but, to be clear, in this situation, so long as
the representation is re-established prior to the date of the award of
benefits (and is direct-pay eligible), the commenter would be allocated
the entire fee under Sec. 14.636(i)(1)(i). If the representation is
not re-established in time, the commenter would nevertheless receive
the fee allocation notice and, if dissatisfied with a Sec.
14.636(i)(1)(ii) split, could request OGC review to ensure receipt of a
reasonable fee. Accordingly, this rule provides agents and attorneys in
such circumstances a sufficient remedy.
A third commenter stated opposition to a ``default fee split of any
kind'' because it ``unlawfully impose[s] fee sharing'' and is unethical
under ABA Formal Opinion 487. See ABA Comm. On Ethics & Prof'l
Responsibility, Formal Op. 487 (2019). VA thanks the commenter, but
Opinion 487 addresses a successor counsel's obligations to its client
and prior counsel upon (and prior to) fee receipt; it does not address
an agency's authorities or obligations under 38 U.S.C. 5904 in a multi-
agent or multi-attorney case. To be clear, we do not dispute the
relevance of this opinion in terms of the ethical obligations of
representatives. Indeed, in the preamble to its proposed rule, VA
stated that, ``upon receipt of a fee allocation notice, the agent or
attorney has a professional responsibility to review the default fee
and ensure that it is not clearly unreasonable; if it is, that agent or
attorney has an ethical obligation to return that fee to the
claimant.'' 88 FR at 88,296. VA further emphasized that ``[t]he failure
to return the fee to the claimant in such circumstances could
constitute a violation of VA's standards of conduct warranting
suspension or cancellation of the agent's or attorney's accreditation
to represent claimants before VA.'' Id. So, we agree that the Model
Rules of Professional Conduct and Opinion 487 are relevant to agent and
attorney obligations under this rule, but we do not agree that either
ethically precludes VA from implementing this rule. We also do not
agree with the commenter's allegation that this rule imposes mandatory
fee sharing; as
[[Page 85058]]
stated above, the default allocation is just an initial baseline, and
if any agent or attorney believes they should not have to share a fee
with another representative, they can simply file for OGC
reasonableness review.
Accordingly, VA makes no change in response to these comments.
Comments on Fee Reasonableness Data
One commenter stated that the ``very small pool of data'' presented
by VA in the preamble to the proposed rule (88 FR at 88,296) was
insufficient to ``draw a sweeping conclusion that a client should
automatically be part of the default allocation,'' when considering
``the large number of fees awarded in a year that never are
contested.'' Another commenter stated that different data--comparing
the cases that returned some of the potential fee to the claimant with
``the total number of cases where fees were generated, entitlement was
established, and there was no referral or contest to OGC''--would be
more relevant.
VA appreciates these comments, but disagrees about what data is
most relevant here. The purpose of the data presented in the preamble
to the proposed rule was to explain why we included the claimant in the
default allocation for cases where all agents or attorneys were
discharged. 38 CFR 14.636(i)(1)(ii). We reviewed the data for OGC
reviews in such cases (not just a sample, but the entire pool of such
cases from fiscal year 2022 and the first three-quarters of fiscal year
2023); the data reflected that--more often than not--OGC found it
reasonable to return some of the potential fee to the claimant; and we
concluded (for this reason and others, see 88 FR at 88,296) that a
default that included the claimant in the allocation was a generally
reasonable baseline for this type of case. Comparing this data to the
total number of cases where OGC review was not provided is less
relevant, because chronicling the number of cases where no entity
decided reasonableness does not illuminate what a generally reasonable
baseline for this type of case would or should be.\3\
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\3\ We will take this opportunity to note that the data for the
first three quarters of fiscal year 2023 (88 FR at 88,296) remained
consistent through the last quarter. In total, of the 115 fee
reasonableness decisions issued in fiscal year 2023 addressing the
situation where all agents and attorneys had been discharged, OGC
returned some of the potential fee to the claimant in 103 of those
decisions (89%). Overall, $2.2 million was at stake in these 115
cases, and OGC returned $1.52 million to claimants (69% of the
amount at stake). This data further confirms that Sec.
14.636(i)(1)(ii) provides a generally reasonable baseline for this
type of case.
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A third commenter stated that VA's data reflects that OGC should
continue reviewing fee reasonableness for every multi-agent or multi-
attorney case. VA appreciates this comment, but the data presented was
not addressing all multi-agent or multi-attorney cases; it was only
addressing cases where all agents or attorneys had been discharged; and
there is no basis for assuming that the data from this subset of cases
is replicated for ``continuous'' agent or attorney matters, where
fundamentally different factors are at play that generally result in
the return of less money to claimants, including (1) the fact that the
favorable decision awarding benefits was obtained during the
representation and (2) the presumption that the continuous
representative's fee is reasonable under Sec. 14.636(f)(1). In
general, VA believes that OGC's time and resources should be primarily
dedicated to protecting claimants from unreasonable fees and resolving
disputes over fees, rather than sua sponte deciding a fee allocation
between attorneys or agents at no benefit to a claimant (as occurs in
many cases where the Sec. 14.636(f)(1) presumption of fee
reasonableness applies).
A fourth commenter suggested that additional data--regarding OGC's
inventory, OGC's oldest pending cases, VA regional offices that refer
cases to OGC, and the percentage of OGC's cases initiated by a party--
would be relevant. While VA does not have comprehensive data on all
these issues, a review of OGC's incoming cases from the first quarter
of fiscal year 2024 reflects that 77.5% of incoming cases were referred
by the Veterans Benefits Administration, while 22.5% were the result of
a party's request for review. Moreover, a sample of 138 OGC cases
decided between March 2022 and January 2024 reflects that, on average,
a decision on fee reasonableness was issued 2.9 years after VA's
determination on fee eligibility. This data confirms that this rule's
fundamental change--from automatic OGC review of direct-pay multi-agent
or multi-attorney cases to party-initiated review \4\--is likely to
have a significant effect on efficiency and to enable both
representatives and veterans to receive their fees and benefits
faster.\5\
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\4\ Though OGC may still initiate its own review, Sec.
14.636(i)(4), this rule was structured so that most of its reviews
would be the product of party initiation.
\5\ The above data (as well as the data provided in the preamble
to the proposed rule) has been placed on the rulemaking docket,
available at <a href="http://www.regulations.gov">www.regulations.gov</a>.
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VA makes no change in response to these comments.
Comments on Allowing for Compromise Between the Parties
One commenter expressed appreciation for ``the time and effort OGC
exerted to propose a solution'' for expediting fee matters and agreed
with VA that ``there are many fee matters that can be worked out
between the parties'' (quoting 88 FR at 88,295). However, the commenter
then opined that VA's proposal ``does not provide for such
resolutions'' and suggested that ``parties should be permitted to
submit a negotiated agreement.'' Another commenter stated that VA
should ``create a process for attorneys and accredited agents'' to
submit a ``consented arrangement.'' A third commenter suggested that
``VA create a form in which attorneys and accredited agents clearly
state the mutually requested allocation of the fee, waive the rights to
appeal and to reasonableness review, and in which claimants could
additionally opt to waive the 60-day due process period. Upon receipt
of this form signed by all parties, VA would simply release payment
according to the parties' mutual agreement.'' The commenter stated that
this process would not ``overlook[ ] the possibility of a reasonable
compromise [on fees] between accredited agents and attorneys.''
VA thanks the commenters for these suggestions. But this final rule
does allow for ``negotiated agreement[s]'' or ``consented
arrangement[s],'' and does not overlook the possibility of compromise
amongst the parties at issue. Indeed, VA has structured the default
allocation rules so that the parties have a 60-day window to reach a
compromise on their own. If a compromise is reached, there is no need
to submit anything to VA: VA will release the fee in accord with the
fee allocation notice and the parties can simply re-allocate the fee on
their own in accord with the compromise reached. Thus, this final rule
achieves the same aims as the commenters' proposals.
Moreover, while achieving the same aims, the final rule is
preferable to the commenters' proposals. The commenters' proposals
would require OGC review whenever an agreement is not submitted; this
final rule would require OGC review whenever a request for
reasonableness review is submitted. That difference between ``opt-in''
and ``opt-out'' will have a significant effect on the queue for OGC
reasonableness reviews and the time that attorneys, agents, and
claimants must wait to receive their earned fees and benefits. The
final rule is preferable on that front.
[[Page 85059]]
Finally, to the extent the commenters are seeking an avenue to
waive the 60-day period, it is unclear that the benefit of such an
avenue (fee release days or weeks earlier) outweighs the burden of
carefully reviewing such a waiver to ensure that claimants have
knowingly and voluntarily waived their appellate rights (to both OGC
and Board review). We do not outright reject the idea, but think it is
best to implement this final rule and then reassess. The final rule as
it stands will, in many cases, reduce the time for fee receipt from 2.9
years on average (see data noted above) to approximately 60 days.
Accordingly, VA makes no change in response to these comments.
Comments on Consequences of This Rule
One commenter stated that this rule could add to OGC's inventory of
fee reasonableness cases, because discharged agents or attorneys who
worked on a case for years will not be satisfied with the provision of
fees to a continuous agent or attorney under Sec. 14.636(i)(1)(i), or
with a split fee under Sec. 14.636(i)(1)(ii), and will therefore
request OGC review. Another commenter similarly predicted ``more
reasonableness reviews/appeals'' under this rule.
VA appreciates the comments, but disagrees that OGC will have a
higher inventory under this rule. Currently, OGC reviews every direct-
pay case involving multiple agents or attorneys, whether the parties
desire that review or not. Under this rule, OGC will generally limit
its review to cases where a party requests it. That is a dramatic
difference, as it could divert up to 77.5% of OGC's incoming caseload
(per the data presented above). The situation laid out by the first
commenter--discharged agents or attorneys who provided extensive
services on a case for years--may be the most common circumstance where
(the parties have difficulty reaching a compromise and) OGC review is
desired, but there are many situations (e.g., all representatives are
from the same law firm; all representatives reach an agreement to re-
allocate fees upon release; all representatives are fine with the
default allocation) where OGC review will no longer be needed under
this rule. This efficiency gain will enable both representatives and
veterans to receive their fees and benefits faster.
The first commenter further stated that this rule could incentivize
claimants ``to terminate representation when they anticipate a
favorable decision,'' and could disincentivize agents and attorneys
from representing claimants with prior agent or attorney
representation. The second commenter echoed the concern about a
potential disincentive here. VA appreciates the comments, but sees no
basis for such speculation. First, the prospect that a claimant could
be so confident that a favorable decision is forthcoming, so
knowledgeable about Sec. 14.636(i)(1)(ii), and so manipulative as to
terminate representation to take advantage of that provision, is
extremely unlikely. This assessment is confirmed by another commenter,
who stated that ``the vast majority of the thousands of clients we've
successfully represented before VA have been proven to be extremely
honest and would never even think to purposely drop us as their legal
representative in order to avoid having to pay our legal fee.'' In any
event, even in that extremely unlikely case of claimant manipulation,
the attorney or agent at issue could simply file for OGC review to
ensure receipt of a reasonable fee for the case. Second, even if VA
decided not to enact this rule, that same ``incentive to terminate''
would still exist, because terminating a representative before a
decision renders the presumption of fee reasonableness inapplicable.
Compare 38 CFR 14.636(f)(1) with 38 CFR 14.636(f)(2). So this rule
presents no meaningful incentive change for claimants.
The same logic applies to the concern that agents and attorneys
will not represent claimants with prior agent or attorney
representation. Even if VA decided not to enact this rule, that same
``disincentive'' already exists under current practice, because all
direct-pay cases involving multiple agents or attorneys are currently
referred to OGC for allocation of the fee. So, either way, agents and
attorneys know that the fee in the case will have to account for the
prior agent or attorney. If anything, when compared to current
practice, the rule change promotes representation of claimants with
prior agent or attorney representation, given the structure of the
Sec. 14.636(i)(1)(i) default.
Accordingly, VA makes no change in response to these comments.
Comments on Fee Eligibility and Reasonableness
One commenter stated that VA's proposal unlawfully vests OGC with
the authority to decide questions of fee eligibility in the first
instance. Respectfully, that is a misunderstanding. Under this rule,
Sec. 14.636(i)(1) is clear that ``the agency of original jurisdiction
that issued the decision'' awarding past-due benefits--which is not
OGC--``shall decide whether the agents or attorneys who filed direct-
pay fee agreements in the case are eligible for direct payment.''
Moreover, Sec. 14.636(i)(5) provides that OGC may address fee
eligibility only ``if no other agency of original jurisdiction has made
a determination on that issue.'' This language is substantively
identical to VA's previous regulatory language on the matter. VA is not
expanding, or attempting to expand, the scope of OGC's authority in
this rulemaking.
Another commenter stated that VA's proposal ``conflates'' the
concepts of entitlement to a fee and reasonableness of a fee, because
the default rules assume fee entitlement for all agents and attorneys.
Again, with respect, that is a misunderstanding. Under this rule, Sec.
14.636(i)(1) is clear that the agency of original jurisdiction that
issued the decision awarding past-due benefits ``shall decide whether
the agents or attorneys who filed direct-pay fee agreements in the case
are eligible for direct payment''; Sec. 14.636(i)(1)(i) and (ii) also
contain the ``eligible for direct payment'' caveat; and Sec.
14.636(i)(2) provides that ``direct payment eligibility
determination[s]'' are appealable to the Board. In sum, VA's rule does
not assume fee eligibility or entitlement for all agents and
attorneys--it requires an agency of original jurisdiction finding of
eligibility before an attorney or agent is included in the default
allocation.
The same commenter asserted that VA's proposal ``creates a default
on reasonableness that conflicts with'' 38 U.S.C. 5904(a)(5). VA
appreciates the comment, but, in 2019, VA addressed the interplay
between section 5904(a)(5) (``A fee that does not exceed 20 percent of
the past due amount of benefits awarded on a claim shall be presumed
reasonable.'') and the holding of Scates v. Principi, 282 F.3d 1362,
1365-66 (Fed. Cir. 2002) (discharged attorneys are only entitled to a
fee based on quantum meruit that reflects their contribution to and
responsibility for the benefits awarded). 84 FR 138, 151 (2019). VA
explained that the section 5904(a)(5) presumption applied to continuous
agents or attorneys whose fee does not exceed 20 percent of the past-
due benefits awarded, while the Scates quantum meruit standard applied
to discharged agents or attorneys. 84 FR at 151. VA incorporated that
distinction in 38 CFR 14.636(f)(1)-(2). See also Cox v. McDonough, 34
Vet. App. 112, 126 (2021) (confirming that, per Scates, the fee
reasonableness presumption does not apply when attorney is discharged),
aff'd, 2023 WL 1846117 (Fed. Cir. 2023).
This rule merely continues that distinction. As VA explained in the
[[Page 85060]]
preamble to its proposed rule, the default allocation for cases
involving a (direct pay eligible) ``continuous'' agent or attorney is
logical because that individual's fee is presumed reasonable under
Sec. 14.636(f)(1); and the default allocation for cases where all
agents or attorneys have been discharged is logical because the
reasonableness presumption does not apply to those individuals--quantum
meruit does, under Scates and Sec. 14.636(f)(2). 88 FR at 88,296. So,
to the extent the commenter discerns a conflict between this rule and
section 5904(a)(5), any such conflict would be based in the holding of
Scates and the distinction laid out at Sec. 14.636(f)(1)-(2), not the
provisions being instituted here.
A third commenter asserted that a default allocation that includes
a claimant ``absent a concern raised by that individual is misplaced''
given the presumption of fee reasonableness. Again, however, the
default allocation that includes a claimant (Sec. 14.636(i)(1)(ii)) is
only applicable when the presumption of fee reasonableness does not
apply and quantum meruit does. In a quantum meruit setting, where
discharged attorneys or agents bear the burden of proving the value of
their services, Dobbs v. DePuy Orthopedics, Inc., 842 F.3d 1045, 1050
(7th Cir. 2016); Turpin v. Anderson, 957 S.W. 2d 421, 427 (Mo.App.
1997), there is nothing improper about (1) having a default allocation
that effectively proposes a quantum meruit fee amount and (2) requiring
discharged attorneys or agents to (negotiate with the other parties or)
file with OGC if they believe they have earned more.
Accordingly, VA makes no change in response to these comments.
Comment on Non-Direct Pay Agreements
One commenter suggested that VA's proposal may have contained a
``simple oversight'' in not treating ``a current legal representative
with a valid non-direct pay fee agreement'' as ``a continuous agent or
attorney (meaning that there would be no presumption that they deserve
their entire legal fee). . . .'' The commenter requested that VA pay no
fee to discharged representatives if the claimant has a current legal
representative with a valid non-direct pay fee agreement;
alternatively, that VA institute a presumption that a discharged
representative's fee agreement has ``no legal force'' if ``factors
indicate that [the representative's] work was unsuccessful''; or, in
the further alternative, that VA ``simply stop'' direct payment ``in
all cases.''
VA appreciates the comment, but declines these requests. At the
outset, as a technical matter, those with non-direct pay agreements do
meet the definition of ``continuous agent or attorney'' in Sec.
14.636(i) as long as they provided representation that continued
through the date of the decision awarding benefits. But they are not
entitled to a ``presumption that they deserve their entire legal fee,''
which could be 30, 33, or even 50 percent of the claimant's past-due
benefits. Indeed, in VA's experience non-direct pay agreements hardly
ever qualify for the statutory presumption of reasonableness: A review
of 206 non-direct pay fee agreements received by OGC between February
15, 2023, and March 6, 2023, reflects that 204 of the agreements
(99.03%) charged a fee over 20 percent of the past-due benefits awarded
and therefore were ineligible for the presumption of reasonableness. 38
U.S.C. 5904(a)(5). In contrast, direct pay agreements must charge a fee
that does not exceed 20 percent of the past-due benefits awarded, 38
U.S.C. 5904(d)(1), and therefore are all eligible for the presumption
of reasonableness, 38 U.S.C. 5904(a)(5). Thus, direct pay and non-
direct pay agreements do not always warrant identical treatment, and
particularly when it comes to the default allocation rules, which--only
implicated ``[w]hen one or more direct-pay fee agreements has been
filed''--are primarily designed to facilitate efficient direct payment.
38 CFR 14.636(i)(1) (emphasis added).
That said, as noted in the preamble to the proposed rule, the
default allocation of Sec. 14.636(i)(1)(ii) ``accounts for the
possibility that the claimant may have entered into a non-direct pay
agreement with other agents or attorneys and may be personally
responsible for paying those other agents or attorneys.'' 88 FR at
88,296. So this rule does preserve a portion of the fee for agents and
attorneys with non-direct pay fee agreements. If the agent or attorney
with the non-direct pay fee agreement believes that portion is
insufficient, they have 60 days to resolve the matter with the other
parties on their own; if an agreement cannot be reached, they can
request OGC reasonableness review.
VA has considered the options presented by the commenter, including
declining direct payment for discharged representatives, premising
direct payment on a multi-factor test, or stopping direct payment
altogether. But thousands of agents and attorneys and countless
claimants still find value in direct payment, given (1) the relative
certainty of collection it provides to agents and attorneys, (2) the 20
percent fee limitation it guarantees for claimants, and (3) the power
imbalance and potential for confusion that arises when a representative
privately attempts to collect a fee from a claimant. While this rule's
enactment of Sec. 14.636(h)(1)(iii) is itself evidence that VA is open
to the prospect of declining direct payment in certain types of cases,
VA is not willing--at this point--to abandon the direct payment option
in the circumstances contemplated by the commenter (or to institute a
potentially lengthy and subjective multi-factor test). Accordingly, VA
makes no change in response to this comment.
Comment on Rosinski and Snyder
One commenter stated that the ``cash payment'' provision that VA
proposed to relocate without change from Sec. 14.636(h)(1)(iii) to
Sec. 14.636(h)(1)(iv) ``directly conflicts'' with Rosinski v. Wilkie,
32 Vet. App. 264 (2020), and Snyder v. Nicholson, 489 F.3d 1213 (Fed.
Cir. 2007). VA thanks the commenter for the comment, but its proposed
rule did not contemplate a substantive change to this provision; it
merely relocated the provision without change to make way for a new and
unrelated direct-payment requirement. That said, upon review of the
comment, VA has determined that the continued propriety and suitability
of the cash payment provision in light of Rosinski and Snyder does
warrant additional consideration and public comment, so VA will issue a
proposed amendment to the provision in an upcoming rulemaking. In terms
of the current rulemaking, however, VA did not inform the public that
the substance of this provision was at issue, and VA received no other
comments weighing in on this issue, so VA declines to make any changes
to the current rulemaking in response to this comment.
Questions About This Rule
One commenter asked how VA will ensure that all affected parties
will be provided a fee allocation notice, because (according to the
commenter) ``VA mailing irregularities are well-documented.'' Under
this rule, VA ``shall issue'' the fee allocation notice ``to the
parties,'' which includes ``the claimant or appellant [and] any agent
or attorney who represented the claimant or appellant in the case.'' 38
CFR 14.636(i), (i)(1). So, all affected parties will be provided
notice. But VA declines to implement any distinct procedure from its
ordinary notification processes, and the commenter has suggested no
alternative procedures.
[[Page 85061]]
The commenter also asked ``what training and resources'' will be
provided to retrain affected employees and ``what quality assurance
will be implemented.'' Suffice it to say here that training will be
provided, procedures manuals will be updated, and quality review will
be implemented. Because the commenter has not suggested any specific
actions on that front, VA declines further comment on the matter.
The commenter further asked how VA ``will handle waiver of prior
attorneys in fee cases,'' because (according to the commenter) a
reasonableness review in the case of waiver ``is unnecessary'' and VA's
approach to waiver has been ``inconsistent[ ].'' When an agent or
attorney waives fees, VA will treat them as ineligible for direct
payment (just like a pro bono agent or attorney) when applying the
default rules of Sec. 14.636(i)(1)(i) and (ii) to the case.
Finally, this commenter asked ``what notice VA will issue to whom
if it determines there has been no qualifying request for review, or no
entitlement to fees,'' because (according to the commenter) ``VA
routinely makes such findings erroneously.'' As to ``no entitlement,''
as long as one ``direct-pay fee agreement[ ] has been filed,'' VA will
provide notice to all parties of any determination of fee
ineligibility. 38 CFR 14.636(i)(1). As to ``no qualifying request for
review,'' if no request for OGC review or appeal to the Board is timely
filed, VA may release the fee without additional notice. 38 CFR
14.636(i)(2).
The above question relates to a comment by another commenter, who
recalled a situation where VA overlooked their direct-pay fee agreement
and the claimant thus received the entirety of the past-due benefits.
If the rare circumstance arises where VA mistakenly overlooks a direct-
pay fee agreement (or a timely request for OGC review) and releases the
fee, the affected party should contact OGC, which could move to review
the matter on its own initiative. 38 CFR 14.636(i)(4).
A different commenter asked whether ``there should be a route to
address'' the situation where veterans had to pay attorney fees from
successful clear and unmistakable (CUE) claims pertaining to a
Secretary of Veterans Affairs equitable relief decision on the issue of
traumatic brain injury. Respectfully, this topic is outside of the
scope of this rulemaking. This rulemaking does not address or amend any
provisions regarding fees associated with CUE or equitable relief.
VA thanks the commenters and makes no change in response to these
questions.
Severability
The purpose of this section is to clarify VA's intent with respect
to the severability of provisions of this rule. Each provision of this
rulemaking is capable of operating independently. If any provision of
this rule is determined by judicial review or operation of law to be
invalid, that partial invalidation will not render the remainder of
this rule invalid. Likewise, if the application of any portion of this
rule to a particular circumstance is determined to be invalid, VA
intends that the rule remain applicable to all other circumstances.
Executive Orders 12866, 13563, and 14094
Executive Orders (E.O.) 12866 and 13563 direct agencies to assess
the costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, and other advantages; distributive impacts;
and equity). E.O. 13563 (Improving Regulation and Regulatory Review)
emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility. Executive
Order 14094 (Modernizing Regulatory Review) supplements and reaffirms
the principles, structures, and definitions governing contemporary
regulatory review established in Executive Orders 12866 and 13563. The
Office of Information and Regulatory Affairs has determined that this
rulemaking is not a significant regulatory action under E.O. 12866, as
amended by Executive Order 14094. The Regulatory Impact Analysis
associated with this rulemaking can be found as a supporting document
at <a href="http://www.regulations.gov">www.regulations.gov</a>.
Regulatory Flexibility Act
The Secretary hereby certifies that this final rule will not have a
significant economic impact on a substantial number of small entities
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The basis for this certification is the fact that the rule will
merely institute reasonable default rules for fee allocation and
provide that agents and attorneys who have lost their VA accreditation
collect any earned fees without VA assistance. These changes will not
result in any loss of fees to which an agent or attorney is reasonably
entitled, because, as noted above, any party dissatisfied with the
default allocation in a given case can request OGC's determination on
reasonable fees in the case. Therefore, pursuant to 5 U.S.C. 605(b),
the initial and final regulatory flexibility analysis requirements of 5
U.S.C. 603 and 604 do not apply.
Unfunded Mandates
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C.
1532, that agencies prepare an assessment of anticipated costs and
benefits before issuing any rule that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more (adjusted annually for
inflation) in any one year. This final rule will have no such effect on
State, local, and tribal governments, or on the private sector.
Paperwork Reduction Act
This final rule includes a provision constituting a collection of
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521). The collection of information associated with this rulemaking
has an assigned OMB control number of 2900-0605 requiring a
reinstatement. A reinstatement of this collection of information
requires review and approval by the Office of Management and Budget
(OMB). Accordingly, under 44 U.S.C. 3507(d), VA has submitted a copy of
this rulemaking action to OMB for review and approval. VA received no
comments on the collection of information requiring reinstatement.
OMB has received the collection of information for reinstatement.
OMB's receipt of the collection of information for reinstatement is not
an approval to conduct or sponsor an information collection under the
Paperwork Reduction Act of 1995. In accordance with 5 CFR 1320, the
collection of information reinstatement associated with this rulemaking
is not approved by OMB at this time. OMB's approval of the collection
of information reinstatement will occur within 30 days after the Final
rulemaking publishes. If OMB does not approve the collection of
information reinstatement as requested, VA will immediately remove the
provision containing the collection of information or take such other
action as is directed by OMB.
The collection of information contained in 38 CFR 14.629 and 14.636
is described immediately following this paragraph, under its respective
title.
Title: Application for Accreditation as a Claims Agent or Attorney,
Filing of Representatives' Fee Agreements and Motions for Review of
Such Fee Agreements.
OMB Control No: 2900-0605.
[[Page 85062]]
CFR Provisions: 38 CFR 14.636.
<bullet> Summary of collection of information:
(1) Applicants seeking accreditation as claims agents or attorneys
to represent benefits claimants before VA must file VA Form 21a with
OGC. The information requested in VA Form 21a includes basic
identifying information, as well as certain information concerning
training and experience, military service, and employment.
(2) Accredited agents and attorneys must file with VA any agreement
for the payment of fees charged for representing claimants before VA.
38 U.S.C. 5904(c)(2); 38 CFR 14.636(g).
(3) Claimants, accredited agents, or accredited attorneys may
request an OGC determination on a reasonable fee allocation in a given
case. If they do, OGC will solicit (optional) responses from the other
parties in the case. 38 U.S.C. 5904(c)(3); 38 CFR 14.636(i).
<bullet> Description of need for information and proposed use of
information:
(1) The information in the VA Form 21a is used by OGC to determine
the applicant's eligibility for accreditation as a claims agent or
attorney. More specifically, it is used to evaluate qualifications,
ensure against conflicts of interest, and to establish that statutory
and regulatory eligibility requirements, e.g., good character and
reputation, are met.
(2) The information in recertifications is used by OGC to monitor
whether accredited attorneys and agents continue to have appropriate
character and reputation and whether they remain fit to prepare,
present, and prosecute VA benefit claims.
(3) The information in a fee agreement is used by the Veterans
Benefits Administration (VBA) to associate the fee agreement with the
claimant's claims file, to potentially determine the attorney or
agent's fee eligibility, and to potentially process direct payment of a
fee from the claimant's past-due benefits. It is used by OGC to monitor
whether the agreement is in compliance with laws governing paid
representation, and to potentially review fee reasonableness.
(4) The information in a request for OGC fee review, or a response
to such request, is used by OGC to determine the agents' or attorneys'
contribution to and responsibility for the ultimate outcome of the
claimant's claim, so that a determination on reasonable fees can be
rendered.
<bullet> Description of likely respondents: Claimants, Attorneys,
Agents.
<bullet> Estimated number of respondents: 34,695.
(1) For VA Form 21a applications, 2,280.
(2) For recertifications, 4,860.
(3) For fee agreements, 27,250 (750 first time filers and 26,500
repeat filers).
(4) For requests for OGC fee review, 305.
Total estimated number of respondents (2,280, 4,860, 27,250, 305 =
34,695).
<bullet> Estimated frequency of responses: One time.
<bullet> Estimated Completion Time: Varies as specified below.
(1) For VA Form 21a applications, 45 minutes.
(2) For recertifications, 10 minutes.
(3) For fee agreements, 1 hour for first time filers and 10 minutes
for repeat filers.
(4) For requests for OGC fee review, 2 hours.
<bullet> Total Annual Burden Hours: 8,297 hours.
(1) For VA Form 21a applications, 1,710 hours.
(2) For recertifications, 810 hours.
(3) For fee agreements, 5,167 hours (750 hours for first time
filers and 4,417 hours for repeat filers).
(4) For requests for OGC fee review, 610 hours.
Total estimated annual burden (1,710 hours, 810, hours, 5,167
hours, 610 hours = 8,297 hours).
<bullet> Estimated cost to respondents per year: $633,349.
(1) For VA Form 21a applications, $79,845 ($41,360 + $22,666 +
$15,819).
------------------------------------------------------------------------
------------------------------------------------------------------------
650 initial responses by $84.84 x 487.5 hours $41,360.00
attorneys. (650 x 45 minutes/
response).
960 initial responses by non- $31.48 x 720 hours (960 22,666.00
attorneys. x 45 minutes/response).
670 follow-up responses by non- $31.48 x 502.5 hours 15,819.00
attorneys. (670 x 45 minutes/
response).
------------------------------------------------------------------------
(2) For recertifications, $68,720 (810 hours x $84.84).
(3) For fee agreements, $438,368 (5,167 hours x $84.84).
(4) For requests for OGC fee review, $46,416 ($43,268 + $3,148).
------------------------------------------------------------------------
------------------------------------------------------------------------
255 responses by non-claimants... $84.84 x 510 hours (255 $43,268.00
x 120 minutes/response).
50 responses by claimants........ $31.48 x 100 hours (50 x 3,148.00
120 minutes/response).
------------------------------------------------------------------------
Total estimated cost to respondents per year: ($79,845, $68,720,
$438,368, $46,416 = $633,349).
* To estimate the total information collection burden cost, VA used
the May 2023. Bureau of Labor Statistics (BLS) average hourly wage
codes of 23-1011: Lawyers ($84.84) and 00-0000: All Occupations
($31.48) to derive PRA estimates. This information is available at
<a href="https://www.bls.gov/oes/current/oes_nat.htm">https://www.bls.gov/oes/current/oes_nat.htm</a>. Please note numbers are
subject to rounding for VA estimates.
Congressional Review Act
Pursuant to Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C.
801 et seq.), the Office of Information and Regulatory Affairs
designated this rule as not satisfying the criteria under 5 U.S.C.
804(2).
List of Subjects in 38 CFR Part 14
Administrative practice and procedure, Claims, Courts, Foreign
relations, Government employees, Lawyers, Legal services, Organization
and functions (Government agencies), Reporting and recordkeeping
requirements, Surety bonds, Trusts and trustees, Veterans.
Signing Authority
Denis McDonough, Secretary of Veterans Affairs, approved and signed
this document on October 17, 2024, and authorized the undersigned to
sign and submit the document to the Office of the Federal Register for
publication electronically as an official document of the Department of
Veterans Affairs.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of
General Counsel, Department of Veterans Affairs.
For the reasons stated in the preamble, the Department of Veterans
Affairs amends 38 CFR part 14 as set forth below:
[[Page 85063]]
PART 14--LEGAL SERVICES, GENERAL COUNSEL, AND MISCELLANEOUS CLAIMS
0
1. The authority citation for part 14 continues to read as follows:
Authority: 5 U.S.C. 301; 28 U.S.C. 2671-2680; 38 U.S.C. 501(a),
512, 515, 5502, 5901-5905; 28 CFR part 14, appendix to part 14,
unless otherwise noted.
0
2. Amend Sec. 14.636 by:
0
a. Removing paragraph (c)(4);
0
b. Revising paragraphs (e), (g)(3), and (h)(1)(ii) and (iii);
0
c. Adding paragraph (h)(1)(iv); and
0
d. Revising paragraphs (i) through (k).
The revisions read as follows:
Sec. 14.636 Payment of fees for representation by agents and
attorneys in proceedings before Agencies of Original Jurisdiction and
before the Board of Veterans' Appeals.
* * * * *
(e) Fee reasonableness factors. Fees set forth in a fee agreement,
charged, or received for the services of an agent or attorney admitted
to practice before VA must be reasonable. They may be based on a fixed
fee, hourly rate, a percentage of benefits recovered, or a combination
of such bases. Factors considered in determining whether fees are
reasonable include:
(1) The extent and type of services the agent or attorney
performed;
(2) The complexity of the case;
(3) The level of skill and competence required of the agent or
attorney in giving the services;
(4) The amount of time the agent or attorney spent on the case;
(5) The results the agent or attorney achieved, including the
amount of any benefits recovered;
(6) The level of review to which the claim was taken and the level
of the review at which the agent or attorney was retained;
(7) Rates charged by other agents or attorneys for similar
services;
(8) Whether, and to what extent, the payment of fees is contingent
upon the results achieved;
(9) If applicable, the reasons why an agent or attorney was
discharged or withdrew from representation before the date of the
decision awarding benefits; and
(10) If applicable, the fee entitlement of another agent or
attorney in the case.
* * * * *
(g) * * *
(3) A copy of a direct-pay fee agreement, as defined in paragraph
(g)(2) of this section, must be filed with the agency of original
jurisdiction within 30 days of its execution. A copy of any fee
agreement that is not a direct-pay fee agreement must be filed with the
Office of the General Counsel within 30 days of its execution by
mailing the copy to the following address: Office of the General
Counsel (022D), Department of Veterans Affairs, 810 Vermont Avenue NW,
Washington, DC 20420. Only fee agreements that do not provide for the
direct payment of fees, documents related to review of fees under
paragraph (i) of this section, and documents related to review of
expenses under Sec. 14.637, may be filed with the Office of the
General Counsel. All documents relating to the adjudication of a claim
for VA benefits, including any correspondence, evidence, or argument,
must be filed with the agency of original jurisdiction, Board of
Veterans' Appeals, or other VA office as appropriate. VA may accept fee
agreements that were not filed within 30 days of execution upon a
showing of sufficient cause.
(h) * * *
(1) * * *
(ii) The amount of the fee is contingent on whether or not the
claim is resolved in a manner favorable to the claimant or appellant,
(iii) The agent or attorney is accredited (see Sec. Sec. 14.627(a)
and 14.629(b)) on the date of VA's fee allocation notice (see paragraph
(i) of this section), and
(iv) The award of past-due benefits results in a cash payment to a
claimant or an appellant from which the fee may be deducted. (An award
of past-due benefits will not always result in a cash payment to a
claimant or an appellant. For example, no cash payment will be made to
military retirees unless there is a corresponding waiver of retirement
pay. (See 38 U.S.C. 5304(a) and 38 CFR 3.750))
* * * * *
(i) Fee review. For purposes of this paragraph (i), ``party'' means
the claimant or appellant or any agent or attorney who represented the
claimant or appellant in the case; ``eligible for direct payment''
means eligible for direct payment of a fee under the requirements of
paragraphs (c), (g), and (h) of this section; ``continuous agent or
attorney'' means the agent or attorney who provided representation that
continued through the date of the decision awarding benefits; and
``timely filed'' means within 60 days of the fee allocation notice.
(1) When one or more direct-pay fee agreements has been filed in
accordance with paragraph (g) of this section and a decision awards
past-due benefits in a case, the agency of original jurisdiction that
issued the decision shall issue to the parties a fee allocation notice.
The fee allocation notice shall decide whether the agents or attorneys
who filed direct-pay fee agreements in the case are eligible for direct
payment, and shall provide one of two default fee allocations:
(i) In cases where a continuous agent or attorney is eligible for
direct payment, the default shall be allocation of the fee to the
continuous agent or attorney.
(ii) In cases where paragraph (i)(1)(i) of this section does not
apply, the default shall be an equal split of the fee based on the
number of agents or attorneys who are eligible for direct payment plus
the claimant or appellant.
(2) A party that disagrees with the default fee allocation in a
given case may file a request for Office of the General Counsel fee
review, as provided in paragraph (i)(3) of this section. A party that
disagrees with a direct payment eligibility determination may only
appeal to the Board of Veterans' Appeals. Absent a timely filed request
for Office of the General Counsel fee review or a timely filed appeal
to the Board of Veterans' Appeals, the default fee allocation described
in paragraphs (i)(1)(i) and (ii) of this section is final and VA may
release the fee.
(3) A request for Office of the General Counsel fee review under
this paragraph (i) must be filed electronically in accordance with the
instructions on the Office of the General Counsel's website, or at the
following address: Office of the General Counsel (022D), 810 Vermont
Avenue NW, Washington, DC 20420. The request must include the names of
the veteran and all parties, the applicable VA file number, and the
date of the decision awarding benefits. The request must set forth the
requestor's proposal as to reasonable fee allocation, and the reasons
therefor, and must be accompanied by all argument and evidence the
requestor desires to submit.
(4) Upon the receipt of a timely filed request under paragraph
(i)(3) of this section, or upon his or her own initiative, the Deputy
Chief Counsel with subject-matter jurisdiction will initiate the Office
of the General Counsel's motion for a fee review by sending notice to
the parties. Not later than 30 days from the date of the motion, any
party may file a response, with all argument and evidence the party
desires to submit, electronically in accordance with the instructions
on the Office of the General Counsel's website, or at the following
address: Office of the General Counsel (022D), 810 Vermont Avenue, NW,
Washington, DC 20420. Such responses must be served on all other
parties. The Deputy Chief Counsel
[[Page 85064]]
with subject-matter jurisdiction may, for a reasonable period upon a
showing of sufficient cause, extend the time for any party's response.
(5) The General Counsel or his or her designee shall render the
Office of the General Counsel's decision on the matter. The decision
will be premised on the reasonableness factors of paragraph (e) of this
section, the standards of paragraph (f) of this section, the limitation
on direct payment of paragraph (h)(1)(i) of this section, the claims
file, the parties' submissions, and all relevant factors. The decision
may address the issue of fee eligibility if no other agency of original
jurisdiction has made a determination on that issue.
(6) The Office of the General Counsel's decision is a final
adjudicative action that may only be appealed to the Board of Veterans'
Appeals. Unless a party files a Notice of Disagreement with the Office
of the General Counsel's decision, the parties must allocate any excess
payment in accordance with the decision not later than the expiration
of the time within which the Office of the General Counsel's decision
may be appealed to the Board of Veterans' Appeals.
(j) Failure to comply. In addition to whatever other penalties may
be prescribed by law or regulation, failure to comply with the
requirements of this section may result in proceedings under Sec.
14.633 to terminate the agent's or attorney's accreditation to practice
before VA.
(k) Appeals. Except as otherwise provided in this section, appeals
shall be initiated and processed using the procedures in 38 CFR part 20
applicable to appeals under the modernized system.
[FR Doc. 2024-24708 Filed 10-24-24; 8:45 am]
BILLING CODE 8320-01-P
</pre></body>
</html>Indexed from Federal Register on October 25, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.