In This Section

This section contains the following topics:

Introduction

This topic contains information on the process for considering direct payment of fees, including

• process for possible direct payment of fees, and
• direct payment of fees when incompetency is proposed.

Change Date

8.B.1.a.  Process for Possible Direct Payment of Fees

The table below describes the process to follow for the possible direct payment of fees. AAFCs should reference M21-5, Chapter 8, Section B.2.a to determine when a fee deduction is required.

8.B.1.b.  Direct Payment of Fees When Incompetency is Proposed

The table below describes additional procedures to complete a Pending Fiduciary Withholding Calculator in conjunction with the guidance outlined in M21-5, Chapter 8, Section B, 1.a for the possible direct payment of fees when there is a proposal of incompetency.

Important:

• Do not hold agent/attorney fees approved under the eligibility decision until a fiduciary is appointed, as this could result in considerable delay of payment to the agent/attorney.
• The calculators referred to in the table above are evidentiary and must be included in the claims folder.
• Authorization and payment of the remaining past-due amount (funds not made available for direct fee payment) in a case of an incompetent claimant must follow the guidance in M21-1, Part X, Subpart ii, 6.D.2.

Reference:  For more information on general authorization information on incompetency and fiduciary cases, see M21-1, Part X, Subpart ii, 6.C.

Introduction

This topic contains information on requesting finance activity transactions in preparation for potential payment of fees and authorizing the claimant’s award, including

• when to request finance transactions or use award actions for possible direct payment of fees
• VBMS-A Automated Fee Calculator overrides
• calculating the amount needed for possible payment of fees
• period to use for calculating past-due benefits
• mandatory agent/attorney fee calculator
• calculation of past-due benefits – reductions, offsets, and overpayment
• taking action based on the past-due benefit calculation
• handling cases involving Equal Access to Justice Act (EAJA) fees, and
• handling cases involving an existing debt to the United States Government.

Change Date

8.B.2.a.  When to Request Finance Transactions or Use Award Actions for Possible Direct Payment of Fees

The AAFC must use award actions in VBMS-A or request that the finance activity perform finance transactions to make funds for possible payment of fees in a case when

• substantive and procedural requirements in 38 CFR 14.636(g) have been met
• contains additional fee terms specified in 38 CFR 14.636(h) to the extent consistent with case law, and
• an award of past-due benefits has been prepared by AAFC authorization activity and is in pending status.

Note: A fee deduction is required when a grant of benefits is made under any of the AMA decision review lanes (supplemental claim, higher-level review, or direct appeal to the Board) as well as grants of individual unemployability and clear and unmistakable error under any claim type. The AAFC will make the final adjudication determining whether direct payment of fees are payable or not payable. A deduction of fees does not always represent fee entitlement.

The manual Agent/Attorney Fee Calculator requires only a single AAFC review/signature when it is being routed through finance for an upfront fee deduction as finance personnel complete the second review of the audit.

Important: Effective April 23, 2023, new functionality in VBMS-A automated calculations of the agent/attorney fee amount. Users are still required to complete the manual Agent/Attorney Fee Calculator.

In all cases, except for decisions involving eligibility to the month of the Veteran’s death, and apportionments, AAFCs are required to use VBMS-A to process the fee deduction amount to make funds available for the potential direct payment of fees. The “Agent/Attorney Fee” amount displayed in VBMS-A should reflect the entire fee amount, including the assessment fee if applicable, to be paid even if the total fee amount is greater than the retroactive payment of past-due benefits to the claimant.

This policy applies

• even if, in designated cases, there will be no payout to the claimant from which fees can be withheld
• even if the agent or attorney is no longer the representative, unless the agent or attorney has waived any entitlement to fees in writing (in any form approved for submissions including but not necessarily limited to submissions by mail or e-mail), and
• each time the amount of past-due benefits arising from a particular rating decision changes, including
  • when dependency information is received within 1 year of the date of the rating decision, or
  • when the Veteran is subsequently found eligible for concurrent receipt of military retired pay (MRP) for any time during the past-due benefits period.

References:  For more information on

• when entering finance transactions into VBMS-A occurs in the process for direct payment of fees and who performs the tasks, see M21-5, Chapter 8, Section B, 1.a
• what constitutes a valid fee agreement, see
  • 38 CFR 14.636(g)(1) and (2), and
  • M21-5, Chapter 8, Section A, 1.b and d
• regulatory standard for the amount of past-due benefits, see 38 CFR 14.636(h)(3)
• calculation of past-due benefits for direct fee purposes in reduction or offset cases where there may not be a payout, see M21-5, Chapter 8, Section B, 2.e, and
• handling cases where funds were not made available for potential payment of fees, see M21-5, Chapter 8, Section B, 6.

8.B.2.b.   VBMS-A Agent/Attorney Fee Calculator Overrides

The VBMS-A Automated Fee Calculator cannot be used for awards involving the following:

• requirement to use the entry of priors
• requirement to use the generate award override (GAO)
• use of pension protected rates
• unprocessed Cost of Living Adjustment (COLA) adjustments

The “Calculator Override” box must be selected to input the correct fee deduction amount in the cases listed above, and during other scenarios that would prohibit the automated calculation.

Users must complete the Agent/Attorney Fee Calculator as referenced in M21-5, Chapter 8, Section B, 2.e. The AAFC must enter the “Retroactive Amount for Fees,” “Agent/Attorney Fee,” and the “Assessment Fee Amount” fields. The “Agent/Attorney Fee” amount in VBMS-A should reflect the entire fee amount, includeing the assessment fee if applicable.

Note: The override functionality should also be utilized when the VBMS-A Automated Fee Calculator results in incorrect amounts, greater than one cent, that are identified/verified through comparison of the Agent/Attorney Fee Calculator.

References: For more information on the

• regulatory standard for the amount of past-due benefit, see 38 CFR 14.636(h)(3)
• period to use for calculating the past-due benefit amount, see M21-5, Chapter 8, Section B, 2.c, and
• mandatory use of the Agent/Attorney Fee Calculator, see M21-5, Chapter 8, Section B, 2.e.

8.B.2.c.  Calculating the Amount Needed for Possible Payment of Fees

The Amount that must be made available for potential payment of fees is 20 percent or less (as specified in the direct pay fee agreement) of the past-due benefit, defined in the regulation as the total amount of recurring payments that accrued during the defined period.

References: For more information on the

• regulatory standard for the amount of past-due benefit, see 38 CFR 14.636(h)(3)
• period to use for calculating the past-due benefit amount, see M21-5, Chapter 8, Section B, 2.d, and
• mandatory use of the Agent/Attorney Fee Calculator, see M21-5, Chapter 8, Section B, 2.e.

8.B.2.d.  Period to Use for Calculating Past-Due Benefits

38 CFR 14.636 states that in calculating the past-due benefit, total the payments that accrued during the period 

• from the effective date of the award
• through the date of the decision awarding benefits, not the
  • date of the notification letter, or
  • last day of the month in which the decision awarding benefits was made.

Important:  38 CFR 14.636(h)(3) provides that past-due benefits accrue between the effective date of the award and the date of the grant of the benefit by the agency of original jurisdiction (AOJ), Board, or an appellate court.  However, in some cases the RO, in implementing an award, must decide a matter that the Board did not (for example initial evaluation and effective date).  38 CFR 14.636(h)(3)(i) explains that when the benefit granted is service connection (SC) then the past-due benefits will be based on an initial disability rating assigned by the AOJ.  In that case, the past-due benefit sum is calculated from the effective date of the award to the date of the initial disability rating.  Although not explicitly discussed in the regulation, anytime the AOJ is required to assign the effective date of the award the period should also be calculated through the date of the implementing rating by the AOJ.  Where a decision by the Board addresses everything needed to implement the decision, such as evaluation and effective date, use the date of the Board decision awarding benefits. 

Note:  Non-monetary benefits such as dependents educational assistance (DEA) do not impact the period for which fees are entitled.

References:  For more information on

• past-due benefits, see
  • VAOPGCPREC 18-1995, and
  • 38 CFR 14.636(h)(3), and
• mandatory use of the Agent/Attorney Fee Calculator, see M21-5, Chapter 8, Section B, 2.e.

8.B.2.e.  Mandatory Agent/Attorney Fee Calculator 

When the AAFC takes action to make funds available for potential payment of fees under M21-5, Chapter 8, Section B, 2.a, the AAFC will use the Agent/Attorney Fee Calculator to calculate the 

• amount of past-due benefits awarded
• agent or attorney fee, if entitlement to a fee is established
• amount that will be paid to the Veteran/beneficiary, if fees are payable, and
• applicable assessment. 

The worksheet of calculator results must be uploaded to VBMS.

Note:  When using the calculator to correct a prior VA administrative error in the calculation of fees on an award do not charge an additional assessment. 

References:  For more information on

• the role of the AAFC in calculating the amount of past-due benefits and the amount to be made available for fees, see M21-5, Chapter 8, Section B, 1.a
• the amount of past-due benefits to make available for potential payment, see M21-5, Chapter 8, Section B, 2.b
• the period to use when calculating past-due benefits, see M21-5, Chapter 8, Section B, 2.d, and
• assessments, see M21-5, Chapter 8, Section B, 3.e.

8.B.2.f.  Calculation of Past-Due Benefits – Reductions, Offsets, and Overpayment

In some cases, the gross amount of an award of past-due benefits will require adjustment due to operation of another legal provision, such as those relating to concurrent receipt.  In those cases, the claimant will not receive the full amount or value of the award and might not receive any payment. 

Calculating the past-due award amount for fee purposes using the post-adjustment amount and requiring a non-recurring payment to the claimant as opposed to using the full award amount based on evaluation and effective date in these cases can affect the value of the agent’s or attorney’s fee.

The court, in Rosinski v. Wilkie, 32 Vet. App. 264 (Fed. Cir. 2020), addressed VA’s obligations to agents/attorneys under 38 U.S.C. 5904(d) in cases when deciding entitlement to direct payment of fees, but an applicable statutory provision requires a reduction or elimination of payment.  The court held that in a case involving MRP, fees must be calculated and directly paid to the agent/attorney based on the pre-reduction amount of the award.  A non-recurring payment to the claimant is not a pre-requisite to payment of fees under a direct pay fee agreement. 

In the following categories of cases, which implicate award adjustments, calculate past-due benefits based on the award amounts prior to reduction. For all attorney fee calculations, use gross rates for both the new and old award amounts.

• MRP
• drill pay
• severance or separation pay
• benefits payable under 38 U.S.C. 1151 after settlement of a tort claim
• limits on compensation payments to incarcerated Veterans under 38 U.S.C. 5313, and
• Survivor Benefit Plan payments.

Where an agent/attorney seeks direct payment of fees based on the invalidation of a debt or the waiver of an overpayment, the amount of past-due benefits is the total that VA has recouped from the claimant as of the date of the decision invalidating the debt or granting the waiver, not the full amount of the debt.

References:  For more information on

• elections and waivers in MRP cases and concurrent entitlement, see M21-1, Part VI, Subpart ii, 4.A
• prohibition against duplication of VA compensation and certain separation benefits and recoupment, see M21-1, Part VI, Subpart ii, 2
• effects of incarceration on VA benefits, see M21-1, Part VI, Subpart iii, 1.A
• fees in cases involving limitations to compensation for incarcerated Veterans under 38 U.S.C. 5313, see Snyder v. Nicholson, 489 F.3d. 1213 (Fed. Cir. 2007)
• fees involving representation on invalidation of a debt or waiver of overpayment, see Gumpenberger v. Wilkie, 973 F. 3d 1779 (Fed.Cir. 2020)
• recovering fee amounts paid by VA when, due to reduction, there was not a non-recurring payment to the claimant from which to directly pay fees, see M21-5, Chapter 8, Section B, 6.e, and
• withholding, paying fees, and corrective action for failure to withhold prior to the January 30, 2020, decision in Rosinski, see the historical M21-1, Part I, Chapter 3.C attachment Historical_M21-1I_3_SecC_1-24-20.docx.

8.B.2.g.  Taking Action Based on the Past-Due Benefit Calculation

The table below provides guidance on the next action to take based on the past-due benefit amount calculation derived from M21-5, Chapter 8, Section B, 2.c–e.

References:  For more information on

• duties of the AAFC, see M21-5, Chapter 8, Section A, 2.b
• requesting transactions to make funds available for payment of fees, see M21-5, Chapter 8, Section B, 2.h
• making a direct pay fee decision, see M21-5, Chapter 8, Section B, 3
• EPs 290 and 400, see M21-4, Appendix B, and
• releasing fee amounts, see M21-5, Chapter 8, Section B, 4.

8.B.2.h.  Handling Cases Involving Equal Access to Justice Act (EAJA) Fees

Equal Access to Justice Act (EAJA) fees are payments that a court has ordered VA to pay to an attorney for representation before the court.

Important:  EAJA fees are not paid from the claimant’s award.  They may appear on the Veteran’s electronic record as a payment made jointly to the claimant and the attorney but should never be offset from a direct payment of fees, even when VA fails to withhold fees.

Where a claimant’s attorney receives fees for the same work under VA’s fee statute and EAJA, the attorney is responsible for refunding the amount of the smaller fee to the claimant.

References:  For more information on

• the EAJA offset provision, see Ravin v. Wilkie, 30 Vet.App. 310 (2019), and
• failure to enter transactions to make funds available for payment of fees, see
  • M21-5, Chapter 8, Section B, 6, and
  • VAOPGCPREC 12-1997.

8.B.2.i.  Handling Cases Involving an Existing Debt to the United States Government

In some cases, requirements for the entitlement to agent/attorney fees exist; however, there is an existing debt to the United States Government that may reduce or remove the amount of fees that VA is able to pay the attorney directly.

In VAOPGCPREC 12-93 Payment of Attorney Fees from Past-due Benefits when Veteran’s Indebtedness to the U.S. Exceeds Total Amount of Past-due Benefits, the Office of General Counsel concluded that the direct payment of fees under 38 U.S.C. § 5904(d) would be based on the amount available after the indebtedness was satisfied.

AAFCs must review the file to determine if the past-due benefits will be used to satisfy an existing debt. If an existing debt will reduce or remove VA’s ability to pay attorney fees directly, the AAFC is responsible for using the fee eligibility decision verbiage found in M21-5, Chapter 8, Section B.9.a. 

Introduction

This topic contains information on making an agent or attorney fee eligibility decision and sending decision notice, including

• when to make a fee decision and send decision notice
• responsibility for making the fee decision and sending decision notice
• criteria for determining eligibility to direct payment of fees
• generating decision notice for a fee decision, and
• calculating agent or attorney assessments when making the fee decision.

Change Date

8.B.3.a.  When to Make a Fee Decision and Send Decision Notice 

A Summary of Case Fee decision notice letter is required when there is a valid fee agreement of record, executed during the retroactive period, and valid representation as stated in M21-5, Chapter 8, Section B, 2.a.

Note: Fee eligibility decisions are required in all circumstances except if the rating or non-rating decision only denies and/or confirms and continues benefits.  

When generating the fee eligibility decision notice, perform a one-time clear of EP 290, Attorney Fee Eligibility Determination.   

References:  For more information on

• the stages in the process for direct payment of fees, see M21-5, Chapter 8, Section B, 1.a
• making a decision on the basis that the calculated past-due benefits is $0, see M21-5, Chapter 8, Section B, 2.g
• use of EP 290 for fee case, see M21-4, Appendix B, and
• the claim label Attorney Fee Eligibility Determination, see M21-4, Appendix C. 

8.B.3.b.  Responsibility for Making the Fee Decision and Sending Decision Notice 

The Authorizing AAFC at the station that processes the represented claimant’s award of past-due benefits is responsible for determining eligibility to direct payment of fees and generating and sending decision notice.   

8.B.3.c.  Criteria for Determining Eligibility to Direct Payment of Fees 

Determine eligibility by evaluating whether the facts meet the regulatory criteria from 38 CFR 14.636, as discussed in M21-5, Chapter 8, Section A, 1.

Important:  For fee cases to which the guidance in effect prior to February 19, 2019, is applicable, previously issued guidance can be found in the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx.

8.B.3.d.  Generating Decision Notice for a Fee Decision  

The decision notice on direct payment of fees is created using the “Summary of Case Fee Decision Notice Letter” section of the Agent/Attorney Fee Tab in VBMS-A.

Note: The Letter Creator tool may be used in scenarios that would prohibit the use of VBMS-A fee decision notice functionality. 

Important: Send the OGC Fact Sheet, “How to Challenge a Fee,” with the fee decision notification.

References:  For more information on

• the letter to send when a representative is not accredited, see M21-5, Chapter 8, Section A, 3.b
• providing notice when a fee agreement is submitted by an agent or attorney but there is no VA Form 21-22a of record, see M21-5, Chapter 8, Section A, 3.c
• the letter to send when a fee agreement is unacceptable, see M21-5, Chapter 8, Section A, 3.d, and
• Letter Creator tool, see the Letter Creator User Guide.

8.B.3.e.  Calculating Agent or Attorney Assessments When Making the Fee Decision 

38 CFR 14.636(h) provides that VA will charge and collect an assessment in the amount of 5 percent of the awarded fee not to exceed $100.

The actual collection of the assessment amount does not occur until fee amounts are released and this in turn is dependent on whether there is an appeal on the fee eligibility decision.  However, the AAFC must calculate the assessment at the time the fee decision is made and information on the assessment must be included in the decision notice.

Introduction

This topic contains information on releasing funds and appeals of eligibility determinations, including

• fee eligibility appeals
• prohibitions on releasing funds and appeal rights
• releasing funds
  • when the fee decision is not appealed, and
  • when an assessment
    • is required, and
    • is not required
• taking action if the claimant dies before the decision is promulgated, and
• mandatory use of the Fee Release Memorandum

Change Date

8.B.4.a.  Fee Eligibility Appeals

A claimant may file an appeal to the Board from an RO eligibility determination that fees are payable from past-due benefits.  Bases may include that 

• the case for which a fee is being sought was not decided on a qualifying review from an initial decision
• the claimant did not sign a VA Form 21-22a authorizing representation from the agent or attorney seeking a fee, or
• the claimant did not sign a written agreement to pay an agent/attorney fee from past-due benefits.

Important:  Appeals from fee eligibility decisions are considered contested.  A party to a contested claim must file an appeal directly to the Board within 60 days of the date of the decision notice.  Decision notices on fee eligibility attach the VA Form 20-0998, Your Right to Seek Review of Our Decision, which provides information on how to appeal to the Board and time limits for appeals of contested claims.

References:  For more information on

• contested claims and appeals, see M21-1, Part VI, Subpart iii, 3
• reasonableness reviews, see M21-5, Chapter 8, Section B, 5
• organizational responsibility for handling appeals from direct pay fee eligibility determinations, see M21-5, Chapter 8, Section A, 2.a, and
• historical guidance on appeals prior to February 19, 2019, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx.

8.B.4.b.  Prohibitions on Releasing Funds and Appeal Rights

Regardless of whether the decision on eligibility to fees is an award or denial of fees, do not release funds until the period has expired for direct appeal to the Board or the Board has issued a decision on eligibility to fees.  

Important:  VA does not honor requests to expedite payment of fees, even when the claimant and/or the agent or attorney have waived the right to appeal.

Note: The AAFC can determine if an appeal has been filed, and whether an appeal that has been filed is still pending, by reviewing the Board’s Caseflow applications or the Veterans Appeals Control and Locator System (VACOLS) for legacy appeals. 

References:  For more information on releasing funds when a fee determination

• has been appealed, see M21-5, Chapter 8, Section B, 4.c, and
• has not been appealed, see M21-5, Chapter 8, Section B, 4.d.

8.B.4.c.  Releasing Funds When the Fee Decision Is Not Appealed

The AAFC will check Caseflow (or VACOLS for legacy appeals) 65 days after the issuance of the direct pay fee decision to determine if an appeal was filed at the Board.  Where the direct pay fee decision was not appealed and a reasonableness review request is not of record, funds will be released as provided in either M21-5, Chapter 8, Section B, 4.e or f, depending on whether or not an assessment is required in the case. 

As specified in M21-4, Appendix B, EP 400 should be pending and must be cleared when funds are released.  Pursuant to M21-5, Chapter 8, Section A, 2.b, this is a duty of the AAFC.

If fees have been previously released prior to final adjudication and an EP 400 is not pending, refer to the actions provided in M21-5, Chapter 8, Section B, 6.c.

8.B.4.d.  Releasing Funds When an Assessment Is Required

Except as provided by M21-5, Chapter 8, Section B, 4.f, the finance activity will withhold an assessment from payment to the agent or attorney prior to releasing the fees when fees are awarded to an accredited agent or attorney.

The table below describes the process for releasing funds for agent or attorney fees when an assessment is required. 

Important:

• The memorandum must include the name of the AAFC who prepared it. 
• The finance activity will not release funds without a memorandum from the AAFC.

Notes: 

• VA can deduct an assessment fee of up to 5 percent of the past-due benefit payment, up to $100, each time fees are paid under 38 CFR 14.636(h).  An assessment is required each time an award action is taken on an issue under the fee agreement, including on a reviewed or appealed “downstream” issue. Example:  If the original issue was entitlement to SC, downstream issues would include a subsequent review request or appeal on the effective date of the grant and/or evaluation of the disability.
• Only one assessment of up to $100 is to be charged and deducted even if fees must be paid multiple times for different transactions (e.g., dependency, AEW) if the past-due benefits are based on the same rating.

8.B.4.e.  Releasing Funds When an Assessment Is Not Required

The table below describes the process for releasing funds when an assessment is not required for cases in which the notice of disagreement was received on or before June 19, 2007. 

Important:

• The memorandum must be signed by the AAFC who prepared it. 
• The finance activity will not release funds without a memorandum from the AAFC.

8.B.4.f.  Taking Action if the Claimant Dies Before the Decision Is Promulgated

If the claimant dies after the rating decision is signed and dated by the decision maker, but before the decision is promulgated (in other words, before a portion of the award has been made available for payment of fees), the AAFC will

• calculate the amount of fees
• request transactions to make funds available for fees, and
• make a fee eligibility decision.

Important:  The AAFC must establish an EP 400 prior to calculating the amount of fees.

Note:  If there is no accrued claimant, then the balance of the past-due benefits (80 percent) is not released but is kept in VA’s entitlement fund.

Reference:  For more information on accrued benefits, see M21-1, Part XI, Subpart ii, 3.

8.B.4.g.  Mandatory Use of the Fee Release Memorandum

AAFCs must use the Fee Release Memorandum in all cases when VBMS-A is used to enter the agent/attorney fee deduction.

AAFCs will continue to use local station/legacy practices to release fees previously processed by finance prior to July 25, 2022.

Introduction

This topic contains information on OGC agent or attorney fee reasonableness reviews, including

• what is a reasonableness review
• time limit for motions for reasonableness review
• referring claimant statements to OGC for consideration of reasonableness review
• referral required
  • by fee eligibility for multiple agents/attorneys, and
  • when agent/attorney loses VA-accreditation
• importance of prompt referrals to OGC
• process for referrals for reasonableness review, and
• reasonableness referral follow-up.

Change Date

8.B.5.a.  What Is a Reasonableness Review

A reasonableness review is an analysis and determination by OGC, initiated by a motion filed by the claimant/appellant (or by OGC’s own motion) for review under 38 CFR 14.636(i), of whether a fee meets the requirement in 38 CFR 14.636(e) that fees be reasonable. 

When conducting a reasonableness review, OGC rarely addresses issues of eligibility.  OGC only addresses eligibility under 38 CFR 14.636(c) when the fee agreement does not instruct VA to pay the fee directly out of past-due benefits. 

As contrasted with the bases for an appeal from a RO fee eligibility determination listed in M21-5, Chapter 8, Section B, 4.a, a motion for a reasonableness review is appropriate when a claimant believes that

• the agent or attorney did not earn the fee called for in the fee agreement
• the fee is too high, or
• the fee is otherwise unreasonable.

Important: Unauthorized representation and solicitation of fees by unaccredited attorneys or agents are serious matters and should be reported to OGC. Indications of predatory practices, fraud, or otherwise unlawful acts by representatives may also be reported to the OIG Hotline.

Reference:  For more information on motions for reasonableness reviews see the OGC Fact Sheet, “How to Challenge a Fee.”

8.B.5.b.  Time Limit for Motions For Reasonableness Review

OGC may only review the fee agreement on motion before the expiration of 120 days after final VA action.

In most cases, final VA action means 120 days from the date of the fee decision. VA will refer all reasonableness requests to OGC for review.

Note:  Release of fees may take place after 60 days if no direct appeal to the Board has been filed or no reasonableness review has been requested at that time. 

8.B.5.c.  Referring Claimant Statements to OGC for Consideration of Reasonableness Review

Although 38 CFR 14.636(i) requires that a claimant file a motion for reasonableness review with OGC, refer the case to OGC for consideration of a reasonableness review when the claimant submits a statement to the AOJ,

• requesting review of a fee’s reasonableness, or
• communicating that
  • the agent or attorney fee amount or percentage is too high or unreasonable
  • the agent or attorney did not earn the fee called for in the fee agreement
  • the agent or attorney should be paid for fees only until the date the representation was revoked, or
  • the claimant does not want to pay the agent or attorney.

Important:

• The examples in this list are not exclusive.  For example, a document styled as an appeal in response to a RO decision finding an agent or attorney eligible for fees may also state, or be reasonably read as stating, that the claimant desires a reasonableness review.
• Do not refer the case for a reasonableness review solely on the basis that the fee agreement specifies a fee greater than 20 percent.  The intent of this block is to provide guidance on when statements received from the claimant should be referred to OGC so they can make the determination on whether reasonableness review is appropriate.

References:  For more information on

• required referral for reasonableness review in cases involving multiple agents or attorneys, see M21-5, Chapter 8, Section B, 5.d
• the RO process for referrals for reasonableness review, see M21-5, Chapter 8, Section B, 5.g, and
• the requirements for direct payment of fees and handling cases where an agreement shows a fee of greater than 20 percent, see M21-5, Chapter 8, Section A, 1.e.

8.B.5.d.  Referral Required by Fee Eligibility for Multiple Agents/Attorneys

An RO eligibility determination finding two or more agents/attorneys eligible for payment of fees must be referred to OGC for a reasonableness review regardless of whether the claimant submits any statement implicating reasonableness of fees.

8.B.5.e.  Referral Required when Agent/Attorney Loses VA-Accreditation

The AAFC must submit a reasonableness review to OGC if an agent or attorney was previously accredited and validly represented a claimant for a period of time but lost accreditation prior to the decision granting entitlement. The AAFC must withhold for fees for the entire period and send the decision notice Agent/Attorney Loss of Accreditation to the agent/attorney and the claimant along with appeal rights.

To identify the date accreditation was lost, the AAFC must email the OGC Accreditation Mailbox.

Reference:  For more information on checking VA-accreditation see M21-5, Chapter 8, Section A, 3.b.

8.B.5.f.  Importance of Prompt Referrals to OGC

It is urgent to provide information necessary for OGC’s reasonableness review on the earliest possible date after a statement is received from the claimant that can be construed as a possible reasonableness request or after a determination is made finding multiple agents or attorneys eligible to fees.  Do not delay referral of cases implicating reasonableness review to OGC.

Explanation:  Timely action by the Veterans Benefits Administration in forwarding information to OGC on possible requests for reasonableness review maximizes the potential that in cases where a claimant’s motion is deficient in some respect, OGC will be able to reach out to the claimant for corrective action before the expiration of the 120-day filing deadline.

8.B.5.g.  Process for Referrals for Reasonableness Review

The table below shows the process for referrals to OGC for their review and determination on reasonableness of fees.

8.B.5.h. Reasonableness Referral Follow-Up

OGC decides reasonableness reviews based upon the date that VBA refers the case to OGC (or when the reasonableness review request is received from the claimant). As such, AAFCs should not send any status requests to OGC unless the referral date is prior to the date published in the monthly Agent and Attorney Fee Call Bulletin (provided monthly by OGC).

If an AAFC receives a case based on expiration of the 60-day suspense period, they should ensure that the case was properly referred to OGC and update the suspense for another 60 days without follow-up when the referral date is after the date published in the monthly Agent and Attorney Fee Call Bulletin.

Introduction

This topic contains information on failure to withhold amounts from past-due benefits or otherwise make funds available for payment of fees, including

• when to consider action for failure to make funds available for fees
• effect of VA failure to make funds available on fee entitlement
• corrective action for failure to make funds available for payment of fees when
  • the award did not result in a retroactive payment, and
  • a retroactive payment of past-due benefits has been released, and
• recovery of fees paid by VA in the absence of a non-recurrent payment to the claimant because of an offset/reduction.

Change Date

8.B.6.a.  When to Consider Action for Failure to Make Funds Available for Fees

Corrective action is required when

• substantive and procedural requirements in 38 CFR 14.636(g) have been met,
• contains additional fee terms specified in 38 CFR 14.636(h) to the extent consistent with case law,
• VA failed to perform financial transactions to make funds available for direct payment of fees before an award of past-due benefits was made as required in M21-5, Chapter 8, Section B, 2, and
• the failure is either
  • discovered after VA has awarded and released past-due benefits to the claimant, or
  • discovered in cases where there the award did not include a non-recurrent payment to the claimant because of an offset or reduction as provided in M21-5, Chapter 8, Section B, 2.e.

Note:  VA’s failure to perform finance transactions to make funds available for payment of fees in cases where the award did not result in a non-recurrent payment because of a qualifying offset/reduction, requires corrective action only when the fee issue was pending on or after January 30, 2020 – the date of Rosinski v. Wilkie, 32 Vet. App. 264 (2020).  Prior to that date, VA’s interpretation of 38 CFR 14.636(h) was that, with certain exceptions, a fee agreement would only be honored and fees could only be paid under the direct fee pay program if the past-due benefits awarded resulted in a non-recurrent payment to the claimant from which owed fee amounts could be withheld. 

An assertion or discovery after January 30, 2020, that VA failed to perform finance transactions to make funds available for payment of fees in a fee case falling under the Rosinski holding, but finally decided prior to the date of that holding, requires no corrective action.  

References:  For more information on

• guidance on withholding, paying fees and corrective action for failure to withhold prior to the January 30, 2020, decision in Rosinski, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_1-24-20.docx, and
• guidance on entitlement criteria applicable prior to February 19, 2019, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx.

8.B.6.b.  Effect of VA Failure to Make Funds Available on Fee Entitlement

VA’s failure to perform financial transactions to make funds available for possible direct payment of fees does not relieve VA of its obligation to pay an agent or attorney the fees due.

8.B.6.c.  Corrective Action for Failure to Make Funds Available for Payment of Fees when the Award did not Result in a Retroactive Payment

When VA has failed to perform financial transactions to make funds available for direct payment of fees and it was asserted or discovered after an award was completed that did not result in a retroactive payment to the claimant due to qualifying reduction/offset, follow the chart below to take corrective action (Complete Rosinski):

References:  For more information on

• calculating the amount that should have been made available for payment of fees, see M21-5, Chapter 8, Section B, 2
• guidance on withholding, paying fees and corrective action for failure to withhold prior to the January 30, 2020, decision in Rosinski, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_1-24-20.docx
• guidance on entitlement criteria applicable prior to February 19, 2019, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx, and 
• the Letter Creator tool, see the Letter Creator User Guide.

8.B.6.d.  Corrective Action for Failure to Make Funds Available for Payment of Fees when a Retroactive Payment of Past-Due Benefits has been Released 

When VA has failed to perform financial transactions to make funds available for direct payment of fees and it was asserted or discovered after a claimant has already received a retroactive payment of past-due benefits, follow the chart below to take corrective action (Non-Rosinski/Partial Rosinski): 

Note: In cases where the claims processor correctly performed the necessary finance transactions to make funds available, but due to system failure only part of the fee was correctly deducted, procedures found in this block should only be performed for the amount that did not properly withhold. A review of the initial fee decision and audit should be completed, and if accurate and uncontested by either party, the amount that did properly deduct, should be released following the initial 65-day appeal period.

Important: The AAFC must select the appropriate EP 600 based on the claim type for which the failure to process agent/attorney fees was based upon:

• EP 600 – Attorney Fee Predetermination Notice – Rating: non-DROC related compensation rating workload.
• EP 600 – Attorney Fee Predetermination Notice – NR: non-DROC related compensation non-rating workload.
• EP 600 – DROC – Attorney Fee Predetermination Notice: all DROC related workload.
• EP 600 – PMC – Atty Fee Predetermination Notice – Rating: non-DROC related PMC rating workload (Pension, DIC, Month of Death, and Burial Benefits).
• EP 600 – PMC – Attorney Fee Predetermination Notice – NR: non-DROC related PMC non-rating workload (Pension, DIC, Month of Death, and Burial Benefits).

Following the 65-day appeal period, end products with the above claim labels are routed by the National Work Queue (NWQ) to all stations based on available capacity and the identified work group (Rating, Non-Rating, DROC, Pension, etc.) identified by the selected claim label.

References:  For more information on

• calculating the amount that should have been made available for payment of fees, see M21-5, Chapter 8, Section B, 2
• guidance on withholding, paying fees and corrective action for failure to withhold prior to the January 30, 2020, decision in Rosinski, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_1-24-20.docx
• guidance on entitlement criteria applicable prior to February 19, 2019, see the historical M21-1, Part I, 3.C attachment Historical_M21-1I_3_SecC_4-28-17.docx, and 
• the Letter Creator tool, see the Letter Creator User Guide.

8.B.6.e.  Recovery of Fees Paid by VA In the Absence of a Non-Recurrent Payment to the Claimant Because of Offset/ Reduction

When VA pays fees to an agent or attorney based on an award that did not result in a non-recurring payment to the claimant, VA cannot recover the fees by creating a debt against future benefits paid to the claimant.  

However, VA may recoup the agent/attorney fees previously paid in such circumstances by reducing the retroactive payment from a subsequent award of benefits to the claimant if that award covers the same past-due benefits period as the prior award for which agent/attorney fees were paid.  

Example:  An award of past-due benefits did not result in a retroactive payment to a military retiree because of the Veteran’s receipt of MRP.  Fees of 20 percent of the pre-reduction amount of the award are paid and released by finance from VA appropriation funds to the attorney.  An AEW is subsequently generated, authorizing Concurrent Retirement and Disability Pay (or Combat Related Special Compensation).  The Veteran is now entitled to a retroactive payment for the same past-due benefits period covered by the prior award.  VA must reduce the Veteran’s non-recurrent compensation payment in the amount of attorney fees that VA previously paid.  

If the AEW results in an award covering a later period than for which fees were previously paid, VA would not be permitted to recoup fees that VA paid from the non-recurrent compensation due to the Veteran because that compensation would constitute future benefits with respect to that particular attorney fee. 

Note: All Benefit Eligibility Support Team (BEST) AAFCs processing AEWs that involve fees that will be or were paid from VA funds must establish a collectible receivable (04E transaction) prior to the authorization of the AEW award, regardless if the AEW was generated prior to or after the release of fees. BEST AAFCs will determine the amount of the collectible receivable (04E) by analyzing the net effect of the award that granted and withheld benefits (ex. award processing a higher-level review grant with military retired pay withholdings) and the fee deduction. The collectible receivable established (04E) will send the funds directly to appropriations (VA funds).

The AAFC should send a memorandum with the below language to finance prior to promulgation of the award.

“Please process an 04E transaction for [amount of fee] to recoup from the claimant the agent/attorney fees paid/to be paid via VA funds related to award action dated [enter date of associated award with insufficient funds]. When complete, please notify the AAFC [name of employee who submitted the request].”

Reference:  For more information on processing AEWs, see M21-1, Part VI, Subpart ii, 4.E.

Introduction

This topic contains a sample notice to send the agent or attorney and claimant when more than one attorney/agent has filed a direct pay fee agreement.

Change Date

8.B.7.a.  Decision Notice –More Than One Agent/Attorney Filed a Direct-Pay Fee Agreement

Below is a sample notice to send the agent or attorney and claimant when more than one attorney/agent has filed a direct pay fee agreement.

Note:  Send a copy of the direct pay fee decision shown below to each agent or attorney and to the claimant.

Introduction

This topic contains a sample notice to send the agent or attorney and claimant when a subsequent denial of fees is necessary based on a valid fee agreement that was associated with the file after authorization of payment, due to a missing VA file number or Social Security Number.

Change Date

8.B.8.a.  Decision Notice – No Direct Pay Fee Agreement was Filed

Below is a sample notice to send the agent or attorney and claimant when a subsequent denial of fees is necessary based on a valid fee agreement that was associated with the file after authorization of payment, due to a missing VA file number or Social Security Number.

Introduction

This topic contains a sample notice to send the agent or attorney and claimant when requirements for the entitlement to agent/attorney fees exist but there is an existing debt to the United States Government.

Change Date

8.B.9.a  Decision Notice – Fee Cases Involving Debts to the United States Government

Below is a sample notice to send the agent or attorney and claimant when the requirements for entitlement to agent/attorney fees exist but there is an existing debt to the United States Government.