### Section C. Payment of Attorney Fees

#### Overview

+------------+---------------------------------------------------------+
| #          | > This section contains the following topics:           |
| #### In th |                                                         |
| is Section |                                                         |
+------------+---------------------------------------------------------+

  ------------ ---------------------------------------------- ------------
  Topic        Topic Name                                     See Page

  14           General Information on Fees                    3-C-2

  15           Paying Attorney Fees                           3-C-6

  16           Withholding a Portion of Past-Due Benefits and 3-C-13
               Authorizing an Award                           

  17           Making an Attorney Fee Eligibility Decision    3-C-20
               and Sending Notification                       

  18           Releasing the Money and Responding to          3-C-30
               Disagreements                                  

  19           Failure to Withhold Past-Due Benefits When a   3-C-38
               Fee Agreement Exists                           

  20           Exhibit 1: Attorney Fee Eligibility Decision   3-C-42
               Format                                         

  21           Exhibit 2: Attorney Fee Eligibility Notice     3-C-43
               Letter--Claimant                               

  22           Exhibit 3: Attorney Fee Eligibility Notice     3-C-44
               Letter--Attorney                               

  23           Exhibit 4: Attorney Fee Eligibility Notice     3-C-45
               Letter--Attorney, Failure to Withhold Past-Due 
               Benefits                                       

  24           Exhibit 5: Attorney Fee Eligibility Decision   3-C-46
               Format--Failure to Withhold Past-Due Benefits  

  25           Exhibit 6: Attorney Fee Eligibility Notice     3-C-48
               Letter--Attorney, EAJA Payment Exceeds 20      
               Percent                                        
  ------------ ---------------------------------------------- ------------

#### 14. General Information on Fees

+------------+---------------------------------------------------------+
| #####      | > This topic contains general information on fees,      |
| Introducti | > including                                             |
| on {#intro |                                                         |
| duction .u | -   a definition of attorney fee coordinator            |
| nnumbered} |                                                         |
|            | -   when to refer a case to the attorney fee            |
|            |     coordinator                                         |
|            |                                                         |
|            | -   a definition of Equal Access to Justice Act (EAJA)  |
|            |     fees                                                |
|            |                                                         |
|            | -   the policy on paying EAJA fees                      |
|            |                                                         |
|            | -   information on who may sign a fee agreement         |
|            |                                                         |
|            | -   what to do when a fee agreement is received, and    |
|            |                                                         |
|            | -   the VA role in paying fees to an agent.             |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > An ***attorney fee coordinator*** is an expert on fee |
| Definition | > matters and is responsible for                        |
| : Attorney |                                                         |
|  Fee Coord | -   overseeing                                          |
| inator {#a |                                                         |
| .-definiti | ```{=html}                                              |
| on-attorne | <!-- -->                                                |
| y-fee-coor | ```                                                     |
| dinator .u | -   all attorney fee cases, and                         |
| nnumbered} |                                                         |
|            | -   payment of attorney fees within the regional office |
|            |     (RO), and                                           |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   serving as liaison for attorney fee matters between |
|            |     the                                                 |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   Compensation and Pension (C&P) Service, Board of    |
|            |     Veterans' Appeals (BVA), and other ROs, and         |
|            |                                                         |
|            | -   RO and agents and attorneys on all matters.         |
|            |                                                         |
|            |     > Each RO has an attorney fee coordinator or unit   |
|            |     > appointed by the Veterans Service Center Manager  |
|            |     > (VSCM).                                           |
+------------+---------------------------------------------------------+

Continued on next page

14\. General Information on Fees, Continued

+------------+---------------------------------------------------------+
| ##### b. W | > When you note that a case has an attorney             |
| hen to Ref | > representative, refer the case to your attorney fee   |
| er Case to | > coordinator so that he/she can                        |
|  Attorney  |                                                         |
| Fee Coordi | -   control the case                                    |
| nator {#b. |                                                         |
| -when-to-r | -   provide information on how to proceed, and          |
| efer-case- |                                                         |
| to-attorne | -   flash the file.                                     |
| y-fee-coor |                                                         |
| dinator .u |     > Refer a case to the attorney fee coordinator      |
| nnumbered} |     > *before* inputting an award if it is noted that   |
|            |     > the                                               |
|            |                                                         |
|            | -   decision will result in past-due benefits, and      |
|            |                                                         |
|            | -   claimant has an attorney.                           |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c.   | > ***Equal Access to Justice Act*** (***EAJA***)        |
| Definition | > ***fees*** are fees awarded by a court to a claimant  |
| : EAJA Fee | > so that the claimant may pay the attorney who         |
| s {#c.-def | > represented him/her before the court.                 |
| inition-ea |                                                         |
| ja-fees .u | > ***Important***: EAJA fees are *not* attorney fees    |
| nnumbered} | > paid from past-due benefits.                          |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d. P | > The Court of Appeals for Veterans Claims (CAVC)       |
| olicy on P | > determines entitlement to EAJA fees and Finance makes |
| aying EAJA | > the payment.                                          |
|  Fees {#d. |                                                         |
| -policy-on | > ***Important***: The Veterans Service Center (VSC)    |
| -paying-ea | > has no authority to offset EAJA fees from past-due    |
| ja-fees .u | > benefits.                                             |
| nnumbered} |                                                         |
|            | > ***Reference***: For more information on not          |
|            | > offsetting EAJA fees from past-due benefits, see      |
|            | > [*VAOPGCPREC                                          |
|            | > 12-97*](http://www.va.gov/ogc/docs/Prc12-97.doc).     |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > In the case of agent or attorney fee agreements, any  |
| # e. Who M | > competent claimant can sign a fee agreement, whether  |
| ay Sign a  | > or not he/she is a veteran. If the claimant is        |
| Fee Agreem | > currently incompetent, the fee agreement must be      |
| ent {#e.-w | > honored if it was signed while the claimant was still |
| ho-may-sig | > competent.                                            |
| n-a-fee-ag |                                                         |
| reement .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

14\. General Information on Fees, Continued

+------------+---------------------------------------------------------+
| ###        | > When a fee agreement is received                      |
| ## f. Hand |                                                         |
| ling Fee A | -   back flash the fee agreement on the right hand side |
| greements  |     of the file, and                                    |
|            |                                                         |
|            | -   if there is a running C&P award, do a CORR          |
|            |     transaction to enter code 2 ("potential attorney    |
|            |     fees involved") in the SPECIAL CONDITIONS field on  |
|            |     the M11 screen.                                     |
|            |                                                         |
|            | > ***Important***: Do *not* drop file fee agreements.   |
|            | >                                                       |
|            | > ***Notes***:                                          |
|            |                                                         |
|            | -   When there is a code 2 in the SPECIAL CONDITIONS    |
|            |     field, do not process any awards without the file.  |
|            |                                                         |
|            | -   Do not delete the code 2 even if written notice is  |
|            |     received from the claimant or the attorney that the |
|            |     attorney is no longer the claimant's                |
|            |     representative. The attorney may still be entitled  |
|            |     to payment of attorney fees for a portion of the    |
|            |     past-due benefits.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### g.   | > The SPECIAL CONDITIONS field will accept a one-digit  |
| When the S | > code only. When a fee agreement is received, a RO     |
| PECIAL CON | > using a local alpha code in this field may change it  |
| DITIONS Fi | > to another alpha code as long as local personnel are  |
| eld Alread | > made aware that no awards should be processed without |
| y Contains | > the file.                                             |
|  an Entry  | >                                                       |
|            | > ***Example***: A veteran's master record has a code P |
|            | > in the SPECIAL CONDITIONS field to identify the file  |
|            | > as part of a local project. When a fee agreement is   |
|            | > received, code 2 cannot be entered without erasing    |
|            | > code P. Code P may be changed to code T as long as RO |
|            | > personnel know that this code stands for "P+2." If    |
|            | > the file is transferred to another RO, code 2 should  |
|            | > be entered in the SPECIAL CONDITIONS field.           |
+------------+---------------------------------------------------------+

Continued on next page

14\. General Information on Fees, Continued

+------------+---------------------------------------------------------+
| ####       | > Review the BIRLS LOC screen to determine the location |
| # h. When  | > of the folder, and whether the claimant has more than |
| the Claims | > one folder, for instance, a                           |
|  Folder Is | > Counseling/Evaluation/Rehabilitation (CER) folder or  |
|  Located O | > education folder.                                     |
| utside the | >                                                       |
|  RO or Mul | > Use the table below to determine what to do with the  |
| tiple Fold | > fee agreement when the                                |
| ers Exist  |                                                         |
|            | -   claims folder is located at another RO              |
|            |                                                         |
|            | -   claims folder is located at a records center, or    |
|            |                                                         |
|            | -   claimant has more than one folder.                  |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| If the ...                       | Then ...                          |
+----------------------------------+-----------------------------------+
| claims folder is located at      | -   contact that office by        |
| another RO                       |     telephone or e-mail to        |
|                                  |     coordinate receipt of the fee |
|                                  |     agreement, and                |
|                                  |                                   |
|                                  | -   forward the fee agreement to  |
|                                  |     the RO of record.             |
+----------------------------------+-----------------------------------+
| claims folder is located at the  | -   request that the file be      |
|                                  |     transferred in, and           |
| -   Records Management Center    |                                   |
|     (RMC), or                    | -   file the fee agreement in the |
|                                  |     file when received.           |
| -   Federal Records Center (FRC) |                                   |
+----------------------------------+-----------------------------------+
| claimant has more than one       | forward one copy of the fee       |
| folder                           | agreement to each folder.         |
+----------------------------------+-----------------------------------+

+-----------------------------------------------------------------------+
| > ***Important***: If fee agreements cannot be associated with a VA   |
| > file, return them to the attorney for complete identifying          |
| > information.                                                        |
+-----------------------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### i. V | > VA may *not* pay fees directly to an agent. An agent  |
| A Role in  | > may charge a VA claimant for services, but it is a    |
| Agent Fees | > private matter between the agent and the claimant.    |
+------------+---------------------------------------------------------+

#### 15. Paying Attorney Fees

+------------+---------------------------------------------------------+
| ##### In   | > Under certain circumstances, attorneys enter into fee |
| troduction | > agreements with claimants and VA pays the attorney    |
|            | > fees from past-due benefits. This topic contains      |
|            | > information on paying attorney fees, including        |
|            |                                                         |
|            | -   a definition of past-due benefits                   |
|            |                                                         |
|            | -   the policy on paying attorney fees from past-due    |
|            |     benefits                                            |
|            |                                                         |
|            | -   types of benefits that pay attorney fees            |
|            |                                                         |
|            | -   attorney entitlement to payment of fees from        |
|            |     accrued benefits                                    |
|            |                                                         |
|            | -   reporting requirements for authorization awards     |
|            |     where private attorneys exist                       |
|            |                                                         |
|            | -   when to check for a fee agreement                   |
|            |                                                         |
|            | -   how to check for a fee agreement                    |
|            |                                                         |
|            | -   how to contact BVA to check for a fee agreement     |
|            |                                                         |
|            | -   how to handle attorney fees in cases of             |
|            |     incarceration                                       |
|            |                                                         |
|            | -   how to determine if you should withhold a portion   |
|            |     of past-due benefits, and                           |
|            |                                                         |
|            | -   the overall process for paying attorney fees from   |
|            |     past-due benefits.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > June 19, 2006                                         |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > ***Past-due benefits*** are non-recurring payments    |
|  Definitio | > resulting from a lump sum payment which represents    |
| n: Past-Du | > the total cash payment or the total amount of         |
| e Benefits | > recurring cash payments accrued between the           |
|            |                                                         |
|            | -   effective date of the award, and                    |
|            |                                                         |
|            | -   date of the grant of the benefit by the RO, BVA, or |
|            |     CAVC.                                               |
|            |                                                         |
|            | > ***Reference***: For more information on the          |
|            | > definition of past-due benefits, see [38 CFR          |
|            | > 20.609(h)(3)](http://ww                               |
|            | w.warms.vba.va.gov/regs/38CFR/BOOKA/PART20/S20_609.DOC) |
+------------+---------------------------------------------------------+

Continued on next page

15\. Paying Attorney Fees, Continued

+------------+---------------------------------------------------------+
| ##         | > If the attorney is otherwise eligible, VA can         |
| ### b. Pol | > directly pay an attorney his/her fees from past-due   |
| icy on Pay | > benefits when there is an attorney fee agreement      |
| ing Attorn | > filed with VA that asks for direct payment to the     |
| ey Fees fr | > attorney.                                             |
| om Past-Du | >                                                       |
| e Benefits | > The fee arrangement must be filed with BVA and meet   |
|            | > all the provisions of the law.                        |
|            | >                                                       |
|            | > ***References***: For more information on the policy  |
|            | > for paying attorney fees from past-due benefits, see  |
|            |                                                         |
|            | -   [38 U.S.C.                                          |
|            |                                                         |
|            | 5904,](http://www4.law.cornell.edu/uscode/38/5904.html) |
|            |     and                                                 |
|            |                                                         |
|            | -   [38 CFR                                             |
|            |     20.609.](http://ww                                  |
|            | w.warms.vba.va.gov/regs/38CFR/BOOKA/PART20/S20_609.DOC) |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### c.   | > Attorney fees are payable from benefits other than    |
| Types of B | > compensation and pension benefits, including          |
| enefits th |                                                         |
| at Pay Att | -   Chapter 35 DEA                                      |
| orney Fees |                                                         |
|            | -   Chapter 30 Restored Entitlement Program for         |
|            |     Survivors (REPS)                                    |
|            |                                                         |
|            | -   Counseling/Evaluation/Rehabilitation (CER), and     |
|            |                                                         |
|            | -   Education (EDU).                                    |
|            |                                                         |
|            | > ***Note***: The fee agreement must be between the     |
|            | > attorney and the claimant.                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d. A | > An attorney is entitled to payment of fees from       |
| ttorney En | > accrued benefits that are paid pursuant to [38 U.S.C. |
| titlement  | >                                                       |
| to Payment | 5121,](http://www4.law.cornell.edu/uscode/38/5121.html) |
|  of Fees f | > *only* if the attorney and the accrued benefits       |
| rom Accrue | > claimant have signed a fee agreement.                 |
| d Benefits |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

15\. Paying Attorney Fees, Continued

+------------+---------------------------------------------------------+
| ##### e.   | > When the representative is a private attorney and     |
| Reporting  | > there is a direct-pay fee agreement, enter all        |
| Requiremen | > information into the Compensation and Pension (C&P)   |
| ts for Aut | > website at http://vbaw.vba.va.gov/bl/21/index.htm at  |
| horization | > the time a rating decision is authorized              |
|   {#e.-rep | >                                                       |
| orting-req | > Once on the C&P home page:                            |
| uirements- |                                                         |
| for-author | -   Click on the "CAVC" button                          |
| ization .u |                                                         |
| nnumbered} | -   Then click on the "Attorney Fee Home Page" button   |
|            |                                                         |
|            | -   Enter all information requested, such as the        |
|            |     veteran's name, claim number and attorney's name.   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### f. W | > When a rating decision shows an attorney              |
| hen to Che | > representative, check for a fee agreement between the |
| ck for Fee | > claimant and the attorney before authorizing the      |
|  Agreement | > rating in order to determine whether to withhold a    |
|  {#f.-when | > portion of the past-due benefits to pay attorney      |
| -to-check- | > fees.                                                 |
| for-fee-ag |                                                         |
| reement .u | > ***Reference***: For information on how to check for  |
| nnumbered} | > a fee agreement, see M21-1MR, Part I, 3.C.15.g.       |
+------------+---------------------------------------------------------+

Continued on next page

15\. Paying Attorney Fees, Continued

+------------+---------------------------------------------------------+
| ##### g. C | > Check for a fee agreement by                          |
| hecking fo |                                                         |
| r Fee Agre | -   looking through the entire claims folder, and       |
| ement {#g. |     (***Note***: Fee agreements are usually back        |
| -checking- |     flashed on the right side of the folder.)           |
| for-fee-ag |                                                         |
| reement .u | -   contacting BVA to determine whether                 |
| nnumbered} |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   a fee agreement has been filed                      |
|            |                                                         |
|            | -   another fee agreement exists                        |
|            |                                                         |
|            | -   a different version of the fee agreement has been   |
|            |     filed, or                                           |
|            |                                                         |
|            | -   any correspondence from the claimant or his/her     |
|            |     attorney regarding the fee agreement exists.        |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   checking VACOLS for a copy of a direct pay fee      |
|            |     agreement.                                          |
|            |                                                         |
|            | > Do not send an e-mail to BVA if                       |
|            |                                                         |
|            | -   there is a copy of a direct pay fee agreement in    |
|            |     VACOLS that matches the fee agreement in the        |
|            |     folder, and                                         |
|            |                                                         |
|            | -   the information appears sufficient and clear.       |
|            |                                                         |
|            | > However, do send an e-mail to BVA if                  |
|            |                                                         |
|            | -   there is some discrepancy between the fee           |
|            |     agreements                                          |
|            |                                                         |
|            | -   there is an indication that there is another        |
|            |     representative or another fee agreement, or         |
|            |                                                         |
|            | -   the information in VACOLS is insufficient or        |
|            |     unclear.                                            |
|            |                                                         |
|            | > ***Reference***: For more information on contacting   |
|            | > BVA to check for a fee agreement, see M21-1MR, Part   |
|            | > I, 3.C.15.h.                                          |
+------------+---------------------------------------------------------+

Continued on next page

15\. Paying Attorney Fees, Continued

+------------+---------------------------------------------------------+
| ##### h. C | > To check with BVA for the existence of a fee          |
| ontacting  | > agreement, send an e-mail to Tecola Plowden (in       |
| BVA to Che | > Tecola's absence contact her supervisor, Margaret     |
| ck for Fee | > Peak) with the following information:                 |
|  Agreement |                                                         |
|  {#h.-cont | -   claimant's name                                     |
| acting-bva |                                                         |
| -to-check- | -   veteran's claim number                              |
| for-fee-ag |                                                         |
| reement .u | -   attorney's name and address                         |
| nnumbered} |                                                         |
|            | -   regional office fax number, and                     |
|            |                                                         |
|            | -   a statement informing BVA that                      |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   the award is ready to be input, and                 |
|            |                                                         |
|            | -   they should return a copy of the fee agreement or   |
|            |     other pertinent documentation by fax.               |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > If a veteran's compensation is reduced to 10 percent  |
| i. Withhol | > and he/she is not entitled to a past-due cash payment |
| ding Past- | > because of incarceration, but there is an eligible    |
| Due Benefi | > apportionee, make a decision on eligibility for       |
| ts in Inca | > attorney fees if a direct pay fee agreement exists    |
| rcerated V | > between the claimant and attorney.                    |
| eteran Cas |                                                         |
| es {#i.-wi |                                                         |
| thholding- |                                                         |
| past-due-b |                                                         |
| enefits-in |                                                         |
| -incarcera |                                                         |
| ted-vetera |                                                         |
| n-cases .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

15\. Paying Attorney Fees, Continued

+------------+---------------------------------------------------------+
| ####       | > If any of the following conditions exist, then        |
| # j. Condi | > continue to authorize the award and do *not* withhold |
| tions Resu | > any portion of past-due benefits to pay attorney      |
| lting in N | > fees:                                                 |
| ot Paying  |                                                         |
| Attorney F | -   a fee agreement does *not* exist                    |
| ees {#j.-c |                                                         |
| onditions- | -   the fee agreement does *not* call for VA to         |
| resulting- |     directly pay attorney fees                          |
| in-not-pay |                                                         |
| ing-attorn | -   the rating decision does *not* result in a cash     |
| ey-fees .u |     payment of past-due benefits, or                    |
| nnumbered} |                                                         |
|            | -   the issues in the fee agreement and in the rating   |
|            |     decision are totally unrelated.                     |
|            |                                                         |
|            |     > ***Examples***: ***No Cash Payment***             |
|            |                                                         |
|            |     > The following list describes some of the rating   |
|            |     > decisions which would *not* result in a cash      |
|            |     > payment:                                          |
|            |                                                         |
|            | -   an outstanding overpayment which takes up the       |
|            |     entire amount of past-due benefits                  |
|            |                                                         |
|            | -   a payment of retired pay or separation pay which    |
|            |     now prevents a claimant from receiving past-due     |
|            |     benefits, or                                        |
|            |                                                         |
|            | -   the veteran is incarcerated and his compensation    |
|            |     has been reduced to 10 percent, there is no         |
|            |     apportionee and there are no past-due benefits.     |
|            |                                                         |
|            |     > ***Note***: If there is no cash payment of        |
|            |     > past-due benefits, explain in the award letter    |
|            |     > the reason why there is no payment.               |
|            |                                                         |
|            | > ***Example***: ***Unrelated Issue***                  |
|            | >                                                       |
|            | > The fee agreement clearly relates only to the         |
|            | > veteran's claim for an increase in the evaluation of  |
|            | > his/her service-connected post-traumatic stress       |
|            | > disorder (PTSD). However, the rating, which results   |
|            | > in past-due benefits, shows that the veteran is       |
|            | > entitled to a retroactive award of Chapter 30         |
|            | > education benefits. Therefore the retroactive         |
|            | > education award may be paid without withholding money |
|            | > for possible payment of attorney fees.                |
+------------+---------------------------------------------------------+

Continued on next page

15\. Paying Attorney Fees, Continued

+------------+---------------------------------------------------------+
| ##### k.   | > The table below describes the process for paying      |
| Process fo | > attorney fees from past-due benefits.                 |
| r Paying A |                                                         |
| ttorney Fe |                                                         |
| es From Pa |                                                         |
| st-Due Ben |                                                         |
| efits  {#k |                                                         |
| .-process- |                                                         |
| for-paying |                                                         |
| -attorney- |                                                         |
| fees-from- |                                                         |
| past-due-b |                                                         |
| enefits .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+---------------------------------------+----------------------+
| Stage | Description                           | Reference            |
+-------+---------------------------------------+----------------------+
| 1     | The Veterans Service Representative   | See M21-1MR, Part I, |
|       | (VSR) under review of the attorney    | 3.C.16.              |
|       | fee coordinator withholds a portion   |                      |
|       | of the past-due benefits through the  |                      |
|       | date of the rating decision for the   |                      |
|       | possible payment of attorney fees.    |                      |
|       |                                       |                      |
|       | ***Note***: The attorney fee          |                      |
|       | coordinator must review and authorize |                      |
|       | the VSR's actions.                    |                      |
+-------+---------------------------------------+----------------------+
| 2     | The VSR under review of the attorney  | See M21-1MR, Part I, |
|       | fee coordinator                       | 3.C.17.              |
|       |                                       |                      |
|       | -   decides whether the attorney is   |                      |
|       |     eligible to receive the attorney  |                      |
|       |     fees                              |                      |
|       |                                       |                      |
|       | -   notifies the claimant and his/her |                      |
|       |     attorney of the decision, and     |                      |
|       |                                       |                      |
|       | -   takes end product credit.         |                      |
+-------+---------------------------------------+----------------------+
| 3     | After the appeal period, if there is  | See M21-1MR, Part I, |
|       |                                       | 3.C.18.              |
|       | -   *no appeal*, the VSR under review |                      |
|       |     of the attorney fee coordinator   |                      |
|       |                                       |                      |
|       | ```{=html}                            |                      |
|       | <!-- -->                              |                      |
|       | ```                                   |                      |
|       | -   releases the money to the         |                      |
|       |     entitled person, and              |                      |
|       |                                       |                      |
|       | -   notifies the claimant and his/her |                      |
|       |     attorney that the money has been  |                      |
|       |     released.                         |                      |
|       |                                       |                      |
|       | ```{=html}                            |                      |
|       | <!-- -->                              |                      |
|       | ```                                   |                      |
|       | -   *an appeal*, the VSR              |                      |
|       |                                       |                      |
|       | ```{=html}                            |                      |
|       | <!-- -->                              |                      |
|       | ```                                   |                      |
|       | -   waits until the appeal is         |                      |
|       |     exhausted, and                    |                      |
|       |                                       |                      |
|       | -   follows the final decision in the |                      |
|       |     case, whether it is made by the   |                      |
|       |     RO of original jurisdiction, BVA, |                      |
|       |     or CAVC.                          |                      |
+-------+---------------------------------------+----------------------+

#### 16. Withholding a Portion of Past-Due Benefits and Authorizing an Award {#withholding-a-portion-of-past-due-benefits-and-authorizing-an-award .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > If a direct pay fee agreement exists and the issue    |
| troduction | > for which past-due benefits are being paid is covered |
|  {#introdu | > by the fee agreement, the VSR withholds a portion of  |
| ction-2 .u | > the past-due benefits through the date of the rating  |
| nnumbered} | > decision for the possible payment of attorney fees.   |
|            | > This topic contains information on                    |
|            |                                                         |
|            | -   withholding a portion of past-due benefits when a   |
|            |     running award                                       |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   does not exist, or                                  |
|            |                                                         |
|            | -   exists                                              |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   handling cases with existing accounts receivable    |
|            |                                                         |
|            | -   examples of how to handle cases with existing       |
|            |     accounts receivable                                 |
|            |                                                         |
|            | -   when to establish a 31J deduction, and              |
|            |                                                         |
|            | -   authorizing the award.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > May 6, 2005                                           |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Follow the steps in the table below to withhold a     |
| # a. When  | > portion of the past-due benefits when a running award |
| Running Aw | > does *not* exist.                                     |
| ard Does N |                                                         |
| ot Exist { |                                                         |
| #a.-when-r |                                                         |
| unning-awa |                                                         |
| rd-does-no |                                                         |
| t-exist .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | -   Prepare and authorize the award, including any           |
|       |     retroactive amounts                                      |
|       |                                                              |
|       | -   put the entire amount in a total type 1 withholding, and |
|       |                                                              |
|       | -   suppress the Benefits Delivery Network (BDN) letter.     |
|       |                                                              |
|       | ***Result***: The initial total withholding award creates a  |
|       | master record that allows Finance to establish a 31J         |
|       | deduction and withhold 20 percent of the past-due benefits.  |
+-------+--------------------------------------------------------------+
| 2     | Hold the folder until master record inquiry (MINQ) shows     |
|       | that the award has been processed.                           |
+-------+--------------------------------------------------------------+
| 3     | Prepare an amended award zeroing out the withholding.        |
+-------+--------------------------------------------------------------+
| 4     | -   Generate and display (GAD) the award, and                |
|       |                                                              |
|       | -   print a copy of the award.                               |
+-------+--------------------------------------------------------------+

Continued on next page

16\. Withholding a Portion of Past-Due Benefits and Authorizing an
Award, Continued

  -----------------------------------------------------------------------
  a\. When Running Award Does Not Exist (continued)

  -----------------------------------------------------------------------

  -------- --------------------------------------------------------------
  Step     Action

  5        Send the folder to Finance with a memorandum signed by the
           attorney fee coordinator or attorney fee coordinator designee
           asking finance to withhold 20 percent (or less, if the fee
           agreement calls for less) of the past-due benefits for
           possible payment of attorney fees through the date of the
           rating decision.
  -------- --------------------------------------------------------------

+------------+---------------------------------------------------------+
| ##### b.   | > The table below describes the process for withholding |
|  When Runn | > a portion of past-due benefits when a running award   |
| ing Award  | > exists.                                               |
| Exists {#b |                                                         |
| .-when-run |                                                         |
| ning-award |                                                         |
| -exists .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Stage | Description                                                  |
+-------+--------------------------------------------------------------+
| 1     | The VSR                                                      |
|       |                                                              |
|       | -   prints copies of the M11 and M12 BDN screens, and        |
|       |                                                              |
|       | -   files the copies on the left side of the claims folder.  |
+-------+--------------------------------------------------------------+
| 2     | The VSR                                                      |
|       |                                                              |
|       | -   GADs the award, including any retroactive award lines    |
|       |                                                              |
|       | -   uses reason code 57 on the first award line, and         |
|       |                                                              |
|       | -   prints a copy.                                           |
+-------+--------------------------------------------------------------+
| 3     | The VSR                                                      |
|       |                                                              |
|       | -   adds the following statement to either the Optional Form |
|       |     (OF) 41, Routing and Transmittal Slip or a local         |
|       |     overprint:\                                              |
|       |     "Please compute retroactive amount which will be         |
|       |     generated by award of **\[enter date of GAD award\]**    |
|       |     and establish 31J deduction for **\[enter amount of      |
|       |     percentage to withhold based on fee agreement\]**        |
|       |     percent of retroactive amount per M21-1MR, Part I,       |
|       |     3.C.16.b.", and                                          |
|       |                                                              |
|       | -   sends the entire folder to Finance with a memorandum     |
|       |     signed by the attorney fee coordinator or attorney fee   |
|       |     coordinator designee.                                    |
+-------+--------------------------------------------------------------+

Continued on next page

16\. Withholding a Portion of Past-Due Benefits and Authorizing an
Award, Continued

  -----------------------------------------------------------------------
  b\. When Running Award Exists (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Stage | Description                                                  |
+-------+--------------------------------------------------------------+
| 4     | Finance                                                      |
|       |                                                              |
|       | -   computes the                                             |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   total retroactive benefit, and                           |
|       |                                                              |
|       | -   20 percent (or less) of the total retroactive benefit    |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   writes the following on the GAD copy: "Award will        |
|       |     generate \$XXX.X retro payment. 31J deduction            |
|       |     established for \$XXX.XX."                               |
|       |                                                              |
|       | -   processes a O6B fiscal transaction with a deduction code |
|       |     and 31J in the BDN for 20 percent (or less) of the total |
|       |     retroactive amount payable, and                          |
|       |                                                              |
|       | -   pays the amount of the 31J deduction (20 percent or less |
|       |     of the retroactive payment) to the Agent Cashier via the |
|       |     O6B transaction.                                         |
+-------+--------------------------------------------------------------+
| 5     | The Agent Cashier deposits the 31J deduction in the suspense |
|       | account.                                                     |
|       |                                                              |
|       | ***Note***: This amount remains in the account until the RO, |
|       | BVA, or CAVC determines the amount of the retroactive        |
|       | payment due the attorney.                                    |
+-------+--------------------------------------------------------------+
| 6     | Finance                                                      |
|       |                                                              |
|       | -   verifies that the 31J deduction has been established,    |
|       |     and                                                      |
|       |                                                              |
|       | -   returns the file to the VSC.                             |
+-------+--------------------------------------------------------------+

Continued on next page

16\. Withholding a Portion of Past-Due Benefits and Authorizing an
Award, Continued

+------------+---------------------------------------------------------+
| ####       | > When attorney fees are to be paid from past-due       |
| # c. Handl | > benefits and the master record shows an existing      |
| ing Cases  | > accounts receivable, always pay the existing accounts |
| With Exist | > receivable first. Any money remaining after paying    |
| ing Accoun | > the accounts receivable is available for attorney     |
| ts Receiva | > fees.                                                 |
| ble {#c.-h |                                                         |
| andling-ca | > Compute the attorney fees as 20 percent of the total  |
| ses-with-e | > amount of past-due benefits (the amount before the    |
| xisting-ac | > accounts receivable was collected). Put this amount   |
| counts-rec | > in the decision as the amount owed to the attorney.   |
| eivable .u |                                                         |
| nnumbered} | > ***Note***: It is the attorney's responsibility to    |
|            | > collect any fee amount due in excess of the amount    |
|            | > remaining after paying the accounts receivable from   |
|            | > the claimant.                                         |
|            |                                                         |
|            | > ***Examples***: For examples of handling cases with   |
|            | > existing accounts receivable, see                     |
|            |                                                         |
|            | -   M21-1MR, Part I, 3.C.16.d,                          |
|            |                                                         |
|            | -   M21-1MR, Part I, 3.C.16.e, and                      |
|            |                                                         |
|            | -   M21-1MR, Part I, 3.C.16.f.                          |
|            |                                                         |
|            |     > ***Reference***: For more information on handling |
|            |     > cases with existing accounts receivable, see      |
|            |     > [*VAOPGCPREC                                      |
|            |     > 12-93*.](http://www.va.gov/ogc/docs/PRC12-93.DOC) |
+------------+---------------------------------------------------------+

Continued on next page

16\. Withholding a Portion of Past-Due Benefits and Authorizing an
Award, Continued

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: A veteran is awarded retroactive     |
|  d. Exampl | > pension benefits in the amount of \$2,000.00.         |
| e 1: Exist | > Potential attorney fees from the past-due benefits    |
| ing Accoun | > are \$400.00 (20 percent of the total). A review of   |
| ts Receiva | > the record shows that the veteran has a \$1,000.00    |
| ble {#d.-e | > overpayment from Chapter 34 benefits.                 |
| xample-1-e |                                                         |
| xisting-ac | > ***Result***:                                         |
| counts-rec |                                                         |
| eivable .u | -   Apply \$1,000.00 toward the accounts receivable and |
| nnumbered} |     then withhold the full \$400.00 for potential       |
|            |     payment of attorney fees                            |
|            |                                                         |
|            | -   issue the veteran a payment in the amount of        |
|            |     \$600.00 (\$1,600.00 (80 percent) minus             |
|            |     \$1,000.00), and                                    |
|            |                                                         |
|            | -   notify the veteran and attorney in the *attorney    |
|            |     fee eligibility decision and notice* letter that    |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   20 percent of the past-due benefit was withheld as  |
|            |     potential attorney fees                             |
|            |                                                         |
|            | -   \$1,000.00 of the past-due benefit was applied      |
|            |     against his/her overpayment, and                    |
|            |                                                         |
|            | -   the remaining balance of \$600.00 is paid to        |
|            |     him/her.                                            |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: The same facts as Example 1 in Part  |
|  e. Exampl | > I, 3.C.16.d, except that in this case the veteran has |
| e 2: Exist | > an overpayment of \$1,700.00.                         |
| ing Accoun |                                                         |
| ts Receiva | > ***Result***:                                         |
| ble {#e.-e |                                                         |
| xample-2-e | -   Apply \$1,700.00 toward the accounts receivable,    |
| xisting-ac |     which only leaves \$300.00 for the possible payment |
| counts-rec |     of attorney fees                                    |
| eivable .u |                                                         |
| nnumbered} | -   notify the veteran and attorney in the *attorney    |
|            |     fee eligibility decision and notice* letter that    |
|            |                                                         |
|            | ```{=html}                                              |
|            | <!-- -->                                                |
|            | ```                                                     |
|            | -   \$1,700.00 of the past-due benefit was applied      |
|            |     against his/her overpayment, and                    |
|            |                                                         |
|            | -   the remaining \$300.00 was withheld as potential    |
|            |     attorney fees, but indicate that after liquidating  |
|            |     the debt, there were insufficient remaining funds   |
|            |     to withhold the entire 20percent.                   |
+------------+---------------------------------------------------------+

Continued on next page

16\. Withholding a Portion of Past-Due Benefits and Authorizing an
Award, Continued

+------------+---------------------------------------------------------+
| #####      | > ***Situation***: The same facts as in M21-1MR, Part   |
|  f. Exampl | > I, 3.C.16.d, except that in this case the veteran has |
| e 3: Exist | > an overpayment of \$2,500.00.                         |
| ing Accoun |                                                         |
| ts Receiva | > ***Result***: Notify the veteran that 100 percent of  |
| ble {#f.-e | > the past-due benefits will be applied to the accounts |
| xample-3-e | > receivable and that as a result, there are no         |
| xisting-ac | > past-due benefits. In this case, do not withhold any  |
| counts-rec | > money for possible payment of attorney fees. No       |
| eivable .u | > attorney fee decision is necessary since there are no |
| nnumbered} | > past due benefits.                                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Establish a 31J deduction if                          |
| # g. When  |                                                         |
| to Establi | -   the master record does *not* contain a deduction    |
| sh a 31J D |     segment that allows for automatic offset of a       |
| eduction { |     receivable existing in another benefit system, and  |
| #g.-when-t |                                                         |
| o-establis | -   the amount of past-due benefits is sufficient to    |
| h-a-31j-de |                                                         |
| duction .u | ```{=html}                                              |
| nnumbered} | <!-- -->                                                |
|            | ```                                                     |
|            | -   satisfy the indebtedness, and                       |
|            |                                                         |
|            | -   issue payment to the attorney.                      |
|            |                                                         |
|            |     > In this situation, establish a 31J deduction in   |
|            |     > an amount that represents the total funds         |
|            |     > available for payment to the attorney plus the    |
|            |     > amount of funds that will be applied to the       |
|            |     > receivable.                                       |
|            |                                                         |
|            |     > Do *not* establish a 31J deduction if the entire  |
|            |     > amount of past-due benefits will be applied to    |
|            |     > the receivable balance. Instead establish the     |
|            |     > proper deduction segment.                         |
+------------+---------------------------------------------------------+

Continued on next page

16\. Withholding a Portion of Past-Due Benefits and Authorizing an
Award, Continued

+------------+---------------------------------------------------------+
| ##### h. A | > Follow the steps in the table below to authorize the  |
| uthorizing | > award once a portion of the past-due benefits has     |
|  the Award | > been withheld for possible payment of attorney fees.  |
|  {#h.-auth |                                                         |
| orizing-th |                                                         |
| e-award .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | When the 31J deduction appears on the M01 screen, compare    |
|       | the amount on the M01 screen with the annotation from        |
|       | Finance.                                                     |
|       |                                                              |
|       | ***Note***: The annotation from Finance appears on either a  |
|       | paid and due statement or the GAD copy.                      |
+-------+--------------------------------------------------------------+
| 2     | Is the amount on the M01 screen the same as the annotation?  |
|       |                                                              |
|       | -   If *yes*                                                 |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   generate and print (GAP) the award                       |
|       |                                                              |
|       | -   input the finance action to collect accounts receivable  |
|       |     (FISA) code                                              |
|       |                                                              |
|       | -   authorize the award, and                                 |
|       |                                                              |
|       | -   file the GAD award print side down on the left side of   |
|       |     the claims folder.                                       |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   If *no*, consult with Finance to learn why the           |
|       |     difference exits.                                        |
|       |                                                              |
|       | ***Reference***: For more information on inputting the FISA  |
|       | code, see M21-1MR, Part III, Subpart vi, 2.B.9 (TBD) or      |
|       | [M21-1, Part IV,                                             |
|       | 24.11                                                        |
|       | .](http://www.warms.vba.va.gov/admin21/m21_1/part4/ch24.doc) |
+-------+--------------------------------------------------------------+

#### 17. Making an Attorney Fee Eligibility Decision and Sending Notification {#making-an-attorney-fee-eligibility-decision-and-sending-notification .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > The VSR decides whether the attorney is eligible to   |
| troduction | > receive the attorney fees, notifies the claimant and  |
|  {#introdu | > his/her attorney of the decision, and takes end       |
| ction-3 .u | > product credit. This topic contains information on    |
| nnumbered} |                                                         |
|            | -   deciding attorney fee eligibility                   |
|            |                                                         |
|            | -   determining if BVA decision permits payment of fees |
|            |                                                         |
|            | -   what to do when the attorney no longer represents   |
|            |     the claimant                                        |
|            |                                                         |
|            | -   preparing the decision                              |
|            |                                                         |
|            | -   notifying the claimant and attorney, and            |
|            |                                                         |
|            | -   when to take end product credit.                    |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > June 19, 2006                                         |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ####       | > Five legal requirements exist in order for VA to pay  |
| # a. Decid | > an attorney a fee from past-due benefits. Follow the  |
| ing Attorn | > steps in the table below to decide if the attorney is |
| ey Fee Eli | > eligible to receive attorney fees from past-due       |
| gibility { | > benefits.                                             |
| #a.-decidi |                                                         |
| ng-attorne |                                                         |
| y-fee-elig |                                                         |
| ibility .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | Was there a final BVA decision on the issue involved?        |
|       |                                                              |
|       | -   If *yes*, go to Step 2.                                  |
|       |                                                              |
|       | -   If *no*, the attorney is not eligible for fees to be     |
|       |     paid by VA.                                              |
|       |                                                              |
|       | ***Reference***: To determine what constitutes a final BVA   |
|       | decision, see M21-1MR, Part I, 3.C.17.b.                     |
+-------+--------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

  -----------------------------------------------------------------------
  a\. Deciding Attorney Fee Eligibility (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 2     | Was the attorney retained no later than one year following   |
|       | the date the BVA decision, referred to above, was            |
|       | promulgated? (This condition will also be considered to have |
|       | been met with respect to all successor attorneys-at-law or   |
|       | agents acting in the continuous prosecution of the same      |
|       | matter if a predecessor was retained within the required     |
|       | time period and does *not* apply to the extent the fee is    |
|       | based on work at a court.)                                   |
|       |                                                              |
|       | If not, was the attorney hired while the case was at the     |
|       | court?                                                       |
|       |                                                              |
|       | -   If *one* of these conditions is met, go to Step 3.       |
|       |                                                              |
|       | -   If *neither* of these conditions is met, the attorney is |
|       |     not eligible for fees to be paid by VA.                  |
+-------+--------------------------------------------------------------+
| 3     | Did the past-due benefits result in a cash payment?          |
|       |                                                              |
|       | -   If *yes*, go to Step 4.                                  |
|       |                                                              |
|       | -   If *no*, the attorney is not eligible for fees to be     |
|       |     paid by VA.                                              |
+-------+--------------------------------------------------------------+
| 4     | Is the fee agreement wholly contingent on whether or not the |
|       | matter is resolved in a manner favorable to the claimant?    |
|       |                                                              |
|       | -   If *yes*, go to Step 5.                                  |
|       |                                                              |
|       | -   If *no*, the attorney is not eligible for fees to be     |
|       |     paid by VA.                                              |
+-------+--------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

  -----------------------------------------------------------------------
  a\. Deciding Attorney Fee Eligibility (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 5     | Is the fee agreement limited to 20 percent, excluding        |
|       | expenses, of the total amount of any past-due benefit        |
|       | awarded on the basis of the claim?                           |
|       |                                                              |
|       | -   If *yes*, the attorney is eligible for fees to be paid   |
|       |     by VA.                                                   |
|       |                                                              |
|       | -   If *no*, the attorney is not eligible for fees to be     |
|       |     paid by VA.                                              |
|       |                                                              |
|       | ***References***: For more information on the                |
|       |                                                              |
|       | -   format for the attorney fee eligibility decision, see    |
|       |     M21-1MR, Part I, 3.C.20, and                             |
|       |                                                              |
|       | -   format for the letter of notification, see               |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   M21-1MR, Part I, 3.C.21, and                             |
|       |                                                              |
|       | -   M21-1MR, Part I, 3.C.22.                                 |
+-------+--------------------------------------------------------------+

+-----------------------------------------------------------------------+
| > ***Note***: For an attorney to be eligible for fees to be paid by   |
| > VBA, it is no longer a requirement that a notice of disagreement    |
| > (NOD) be filed on or after November 18, 1988. This was changed by   |
| > Section 603(b) of the Veterans Education and Benefits Expansion Act |
| > of 2001. The change applies to                                      |
|                                                                       |
| -   attorney fee decisions made on or after the date of enactment of  |
|     the Act, December 27, 2001, and                                   |
|                                                                       |
| -   any attorney fee decisions not final as of the date of enactment. |
+-----------------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

+------------+---------------------------------------------------------+
| ##### b. D | > The law provides that an attorney may charge fees     |
| etermining | > only after the date on which BVA first makes a final  |
|  if BVA De | > decision in the case. Generally, the final BVA        |
| cision Per | > decision is a denial by BVA, but there are times when |
| mits Payme | > the BVA decision is a grant.                          |
| nt of Fees | >                                                       |
|            | > The table below describes examples of underlying BVA  |
|            | > decisions that permit payment of fees, if all of the  |
|            | > other conditions are met.                             |
+------------+---------------------------------------------------------+

+---------+------------------------------------------------------------+
| Example | Description                                                |
+---------+------------------------------------------------------------+
| > 1     | ***Situation***                                            |
|         |                                                            |
|         | The rating from which VA withheld 20 percent of            |
|         | retroactive benefits is a grant of service connection for  |
|         | PTSD. In reviewing the file in order to make the decision, |
|         | it is noted that BVA denied service connection for PTSD in |
|         | 1998. The veteran hired a lawyer to represent him/her      |
|         | within a year of the BVA decision and together they filed  |
|         | a request to reopen the claim for service connection for   |
|         | PTSD and the RO awards service connection for PTSD.        |
|         |                                                            |
|         | ***Result***                                               |
|         |                                                            |
|         | The 1998 BVA decision meets the first requirement for      |
|         | paying fees. If all other requirements are met, the        |
|         | attorney is eligible for fees to be paid by VA.            |
|         |                                                            |
|         | ***Notes***:                                               |
|         |                                                            |
|         | -   The 1-year requirement for hiring a lawyer does *not*  |
|         |     apply if the attorney is hired while the case is at a  |
|         |     court.                                                 |
|         |                                                            |
|         | -   The request to reopen the claim does *not* need to be  |
|         |     filed within a year after the BVA decision.            |
+---------+------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

  -----------------------------------------------------------------------
  b\. Determining if BVA Decision Permits Payment of Fees (continued)

  -----------------------------------------------------------------------

+---------+------------------------------------------------------------+
| Example | Description                                                |
+---------+------------------------------------------------------------+
| > 2     | ***Situation***                                            |
|         |                                                            |
|         | The veteran has been service-connected for PTSD since      |
|         | 1977. The recent rating decision, from which VA withheld   |
|         | 20 percent of the retroactive benefits, shows that the RO  |
|         | increased the veteran's PTSD evaluation or that it awarded |
|         | an earlier effective date following the initial grant of   |
|         | service connection for PTSD. In reviewing the file, the RO |
|         | finds no BVA decision on the issue of increase. In fact,   |
|         | the first final decision of BVA, made in 1997, is a grant  |
|         | of service connection. The veteran hired an attorney to    |
|         | represent him/her within one year of the 1997 BVA decision |
|         | and together they filed a NOD with the evaluation and/or   |
|         | the effective date. The RO developed the claim and         |
|         | eventually granted an increase and/or earlier effective    |
|         | date.                                                      |
|         |                                                            |
|         | ***Result***                                               |
|         |                                                            |
|         | -   If an earlier effective date is awarded by the RO, the |
|         |     1997 BVA decision meets the first requirement for      |
|         |     paying attorney fees. If all other requirements are    |
|         |     met, the attorney is eligible for fees to be paid by   |
|         |     VA.                                                    |
|         |                                                            |
|         | -   If the issue is a claim for increase, look to see if   |
|         |     the effective date of the increase goes back to the    |
|         |     date of the original grant of service connection. If   |
|         |     it does, the 1997 BVA decision meets the first         |
|         |     requirement for paying attorney fees. If all other     |
|         |     requirements are met, the attorney is eligible for     |
|         |     fees to be paid by VA.                                 |
|         |                                                            |
|         | ***Note***: The one-year requirement for hiring a lawyer   |
|         | does *not* apply if the attorney is hired while the case   |
|         | is at a court.                                             |
+---------+------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

  -----------------------------------------------------------------------
  b\. Determining if BVA Decision Permits Payment of Fees (continued)

  -----------------------------------------------------------------------

+---------+------------------------------------------------------------+
| Example | Description                                                |
+---------+------------------------------------------------------------+
| > 3     | ***Situation***                                            |
|         |                                                            |
|         | You have withheld 20 percent of retroactive benefits from  |
|         | a rating decision that awarded an increase from 10 percent |
|         | to 30 percent for PTSD. When you review the file you see   |
|         | that the veteran hired an attorney to represent him/her    |
|         | within one year of the 1998 BVA decision that granted an   |
|         | increase for service-connected PTSD from 0 percent to      |
|         | 10percent. Sometime following the 1998 BVA decision, the   |
|         | attorney and the veteran filed a new claim for an increase |
|         | in the evaluation of service-connected PTSD. At some       |
|         | point, following the development of new evidence, the RO   |
|         | grants a further increase in the evaluation of PTSD.       |
|         |                                                            |
|         | ***Result***                                               |
|         |                                                            |
|         | The 1998 BVA decision meets the first requirement for      |
|         | paying attorney fees. If all other requirements are met,   |
|         | the attorney is eligible for fees to be paid by VA.        |
+---------+------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

  -----------------------------------------------------------------------
  b\. Determining if BVA Decision Permits Payment of Fees (continued)

  -----------------------------------------------------------------------

+---------+------------------------------------------------------------+
| Example | Description                                                |
+---------+------------------------------------------------------------+
| > 4     | ***Situation***                                            |
|         |                                                            |
|         | You have withheld 20 percent of past-due benefits from a   |
|         | rating decision that awarded a total rating based upon     |
|         | individual unemployability (TDIU). The veteran is          |
|         | primarily unemployable due to service-connected PTSD.      |
|         | There is no BVA decision on the issue of a TDIU; however,  |
|         | there is a 1998 BVA decision on the issue of service       |
|         | connection for, or an increased evaluation of PTSD and the |
|         | veteran hired an attorney to represent him/her within one  |
|         | year of this decision.                                     |
|         |                                                            |
|         | ***Result***                                               |
|         |                                                            |
|         | This 1998 BVA decision can be a grant or a denial of the   |
|         | issue of service connection for PTSD or on the issue of    |
|         | increase in the evaluation of PTSD.                        |
|         |                                                            |
|         | -   Look to see if the issue of TDIU was reasonably raised |
|         |     at the time of the BVA decision, by the evidence of    |
|         |     record as part of the underlying claim. Was the issue  |
|         |     of TDIU derivative to the claim for PTSD? If so, this  |
|         |     BVA decision meets the first requirement for paying    |
|         |     attorney fees. If all other requirements are met, the  |
|         |     attorney is eligible for fees to be paid by VA.        |
|         |                                                            |
|         | -   Look for the effective date of the grant of TDIU. If   |
|         |     it is earlier than the date of the BVA decision, it    |
|         |     would appear that there was evidence of                |
|         |     service-connected unemployability at the time of the   |
|         |     BVA decision.                                          |
|         |                                                            |
|         | ***Reference***: For more information on payment of        |
|         | attorney fees, see                                         |
|         |                                                            |
|         | -   *Norris v. West*, 12 Vet. App. 413 (1999), and         |
|         |                                                            |
|         | -   *Mason v. West*, 13 Vet. App. 79 (1999).               |
+---------+------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

  -----------------------------------------------------------------------
  b\. Determining if BVA Decision Permits Payment of Fees (continued)

  -----------------------------------------------------------------------

+---------+------------------------------------------------------------+
| Example | Description                                                |
+---------+------------------------------------------------------------+
| > 5     | ***Situation***                                            |
|         |                                                            |
|         | A claim is reopened based on the submission of new and     |
|         | material evidence. The RO declines to reopen the claim,    |
|         | finding that new and material evidence was not submitted.  |
|         | On appeal, the BVA finds that new and material evidence    |
|         | was submitted and remands the claim for the RO to          |
|         | determine whether service connection should be granted.    |
|         | The RO grants service connection.                          |
|         |                                                            |
|         | ***Result***                                               |
|         |                                                            |
|         | The BVA decision meets the first requirement for paying    |
|         | fees. If all other requirements are met, the attorney is   |
|         | eligible for fees to be paid by VA.                        |
|         |                                                            |
|         | ***Note***: In *Stanley v. Principi*, 283 F3d 1350 (Fed.   |
|         | Cir. 2002), the BVA decided there was new and material     |
|         | evidence, and then remanded the claim for adjudication of  |
|         | the issue of service connection by the RO. Following the   |
|         | remand, the RO awarded service connection. The Federal     |
|         | Circuit found that the BVA decision determining there was  |
|         | new and material evidence would suffice as a BVA decision  |
|         | for purposes of payment of fees.                           |
+---------+------------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

+------------+---------------------------------------------------------+
| ####       | > A decision regarding attorney fee eligibility must be |
| # c. Attor | > made when the attorney no longer represents the       |
| ney No Lon | > claimant and a direct pay fee agreement exists        |
| ger Repres | > because the attorney has potential entitlement to 20  |
| ents Claim | > percent of the past-due benefit even if the attorney  |
| ant {#c.-a | > no longer represents the claimant.                    |
| ttorney-no | >                                                       |
| -longer-re | > ***Reference***: For more information on attorney fee |
| presents-c | > eligibility after ending the representational         |
| laimant .u | > relationship with the claimant, see                   |
| nnumbered} |                                                         |
|            | -   [VAOPGCPREC                                         |
|            |     22-95,](http://www.va.gov/ogc/docs/Prc22-95.doc)    |
|            |     and                                                 |
|            |                                                         |
|            | -   [VAOPGCPREC                                         |
|            |     5-96.](http://www.va.gov/ogc/docs/Prc05-96.doc)     |
|            |                                                         |
|            | > ***Note***: If the attorney no longer represents the  |
|            | > claimant he/she is not entitled to a copy of the      |
|            | > rating or any other records in the claims folder.     |
|            | > **Although VA cannot provide records from the claims  |
|            | > folder, VA has an obligation to respond to the        |
|            | > attorney's request for information regarding          |
|            | > potential attorney fees. If, for example, the         |
|            | > attorney asks VA whether an award has been made which |
|            | > might result in attorney fees (or if the attorney     |
|            | > asks for other information relating to attorney       |
|            | > fees), you must respond to the request for            |
|            | > information regarding fees even though the attorney   |
|            | > no longer represents the claimant. For example, you   |
|            | > should inform the attorney whether a rating (relating |
|            | > to the issue(s) for which the attorney represented    |
|            | > the claimant) has or has not been promulgated. If VA  |
|            | > has a direct pay fee agreement from the attorney, you |
|            | > should inform the attorney that if and when           |
|            | > retroactive benefits are paid, twenty percent of the  |
|            | > available retroactive amount will be withheld, an     |
|            | > attorney fee eligibility decision will be made, and   |
|            | > the attorney (as well as the claimant) will be sent a |
|            | > copy of the attorney fee eligibility decision. If VA  |
|            | > finds that a retroactive award was made but attorney  |
|            | > fees were** **not withheld, follow the procedures in  |
|            | > M21-1MR, Part I, 3.C.19. (TEXT HAS BEEN BOLDED)**     |
+------------+---------------------------------------------------------+

Continued on next page

17\. Making an Attorney Fee Eligibility Decision and Sending
Notification, Continued

+------------+---------------------------------------------------------+
| #          | > Past-due benefits are payable from the effective date |
| #### d. Pr | > of the award through the date *preceding* the date of |
| eparing th | > the rating, BVA, or CAVC decision that granted the    |
| e Decision | > benefit. Explain in the decision which date was       |
|            | > selected and why.                                     |
|            | >                                                       |
|            | > ***Example***:                                        |
|            | >                                                       |
|            | > ***Situation***                                       |
|            | >                                                       |
|            | > In its October 14, 2005, decision, CAVC held that the |
|            | > appellant is entitled to service connection for       |
|            | > asthma. On January 24, 2006, the RO promulgates an    |
|            | > award to pay disability compensation for asthma       |
|            | > effective May 1, 2003.                                |
|            | >                                                       |
|            | > ***Result***                                          |
|            | >                                                       |
|            | > The RO withholds 20 percent of the total past-due     |
|            | > benefits payable for the period May 1, 2003, through  |
|            | > October 13, 2005, for payment of attorney fees.       |
|            | >                                                       |
|            | > ***References***: For                                 |
|            |                                                         |
|            | -   a sample of the decision format, see M21-1MR, Part  |
|            |     I, 3.C.20, and                                      |
|            |                                                         |
|            | -   more information on payment of past-due benefits,   |
|            |     see [38 CFR                                         |
|            |     20.609(h)(3)(i).](http://ww                         |
|            | w.warms.vba.va.gov/regs/38CFR/BOOKA/PART20/S20_609.DOC) |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### e.   | > Notify both the claimant and his/her attorney of the  |
|  Notifying | > decision. Attach a copy of the decision to each       |
|  the Claim | > letter.                                               |
| ant and At |                                                         |
| torney {#e | > ***Note***: Do *not* merely send a *copy* of the      |
| .-notifyin | > claimant's letter to the attorney. Send a letter      |
| g-the-clai | > addressed to the attorney as well as a letter         |
| mant-and-a | > addressed to the claimant.                            |
| ttorney .u |                                                         |
| nnumbered} | > ***References***: For a sample of the attorney fee    |
|            | > eligibility notice letter for the                     |
|            |                                                         |
|            | -   claimant, see M21-1MR, Part I, 3.C.21, and          |
|            |                                                         |
|            | -   attorney, see M21-1MR, Part I, 3.C.22.              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### f. W | > Take a 290 end product credit on the date the notice  |
| hen to Tak | > letter is sent out.                                   |
| e End Prod |                                                         |
| uct Credit |                                                         |
+------------+---------------------------------------------------------+

#### 18. Releasing the Money and Responding to Disagreements

+------------+---------------------------------------------------------+
| ##### In   | > Once a decision has been made regarding payment of    |
| troduction | > attorney fees from past-due benefits, the money may   |
|  {#introdu | > be released to the entitled claimant or attorney.     |
| ction-4 .u |                                                         |
| nnumbered} | > This topic contains information on                    |
|            |                                                         |
|            | -   the time limit for appeal of an attorney fee        |
|            |     decision                                            |
|            |                                                         |
|            | -   when to release money withheld for attorney fees    |
|            |                                                         |
|            | -   the process for releasing the money withheld for    |
|            |     attorney fees                                       |
|            |                                                         |
|            | -   what to do in cases of the claimant's death         |
|            |                                                         |
|            | -   the notification of the claimant and attorney       |
|            |                                                         |
|            | -   the need for subsequent decisions based on new      |
|            |     rating decisions                                    |
|            |                                                         |
|            | -   examples of subsequent decisions based on new       |
|            |     rating decisions                                    |
|            |                                                         |
|            | -   responding to a NOD, and                            |
|            |                                                         |
|            | -   responding to complaint of excessive or             |
|            |     unreasonable fees.                                  |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > May 6, 2005                                           |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a. T | > The claimant and his/her attorney have                |
| ime Limit  |                                                         |
| for Appeal | -   60 days to file a NOD, and                          |
|  of Attorn |                                                         |
| ey Fee Dec | -   30 days to file a substantive appeal (usually on    |
| ision {#a. |     *VA Form 9*.)                                       |
| -time-limi |                                                         |
| t-for-appe |     > Apply contested claims procedures to these cases. |
| al-of-atto |                                                         |
| rney-fee-d |     > ***References***: For more information on         |
| ecision .u |                                                         |
| nnumbered} | -   NODs, see M21-1MR, Part I, 5.B                      |
|            |                                                         |
|            | -   substantive appeals, see M21-1MR, Part I, 5.E, and  |
|            |                                                         |
|            | -   contested claims, see M21-1MR, Part III, Subpart    |
|            |     vi, 6 (TBD) or [M21-1, Part IV, Chapter             |
|            |     5.](ht                                              |
|            | tp://www.warms.vba.va.gov/admin21/m21_1/part4/ch05.doc) |
+------------+---------------------------------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

+------------+---------------------------------------------------------+
| ##### b    | > Do *not* release money withheld for attorney fees     |
| . When to  | > until the appeal period has passed or a waiver of the |
| Release Mo | > appeal is received from the adversely affected party. |
| ney Withhe | >                                                       |
| ld for Att | > ***Reference***: For more information on the appeal   |
| orney Fees | > period, see M21-1MR, Part I, 3.C.19.b.                |
|            | >                                                       |
|            | > Use the table below to determine when to release the  |
|            | > money withheld for attorney fees.                     |
+------------+---------------------------------------------------------+

+----------------+-----------------------------------------------------+
| If there is    | Then ...                                            |
| ...            |                                                     |
+----------------+-----------------------------------------------------+
| a waiver of    | release the money immediately to the claimant or    |
| the appeal     | attorney, whomever is entitled.                     |
| from the       |                                                     |
| adversely      |                                                     |
| affected party |                                                     |
+----------------+-----------------------------------------------------+
| no appeal and  | release the money to the claimant or attorney,      |
| no waiver      | whomever is entitled.                               |
|                |                                                     |
|                | ***Note***: Wait 30 days *after* the appeal period, |
|                | for a total of 90 days, before releasing the money. |
+----------------+-----------------------------------------------------+
| an appeal      | -   wait until the appeal is exhausted, and         |
|                |                                                     |
|                | -   follow the final decision made in the case,     |
|                |     whether made by the                             |
|                |                                                     |
|                | ```{=html}                                          |
|                | <!-- -->                                            |
|                | ```                                                 |
|                | -   agency of original jurisdiction                 |
|                |                                                     |
|                | -   BVA, or                                         |
|                |                                                     |
|                | -   CAVC.                                           |
+----------------+-----------------------------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

+------------+---------------------------------------------------------+
| ##### c    | > The table below describes the process for releasing   |
| . Process  | > the money withheld for attorney fees.                 |
| for Releas |                                                         |
| ing the Mo |                                                         |
| ney Withhe |                                                         |
| ld for Att |                                                         |
| orney Fees |                                                         |
+------------+---------------------------------------------------------+

+--------+-----------------------+-------------------------------------+
| Stage  | Who is Responsible    | Description                         |
+--------+-----------------------+-------------------------------------+
| 1      | Attorney fee          | > Writes a memo to Finance          |
|        | coordinator           |                                     |
|        |                       | -   asking Finance to release       |
|        |                       |     attorney fees, and              |
|        |                       |                                     |
|        |                       | -   including the                   |
|        |                       |                                     |
|        |                       | ```{=html}                          |
|        |                       | <!-- -->                            |
|        |                       | ```                                 |
|        |                       | -   ending date for payment of      |
|        |                       |     attorney fees, and              |
|        |                       |                                     |
|        |                       | -   name and address of the person  |
|        |                       |     to whom the fees should go.     |
+--------+-----------------------+-------------------------------------+
| 2      | Finance               | Releases the money when the RO      |
|        |                       | attorney fee coordinator signs the  |
|        |                       | memo.                               |
|        |                       |                                     |
|        |                       | ***Note***: Finance should *not*    |
|        |                       | release the money unless the memo   |
|        |                       | is signed by the office attorney    |
|        |                       | fee coordinator.                    |
+--------+-----------------------+-------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > Use the table below to determine payment of past-due  |
| d. Claiman | > benefits when the claimant dies.                      |
| t Death {# |                                                         |
| d.-claiman |                                                         |
| t-death .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| If the claimant dies after...    | Then the ...                      |
+----------------------------------+-----------------------------------+
| receiving the 80 percent of      | -   withheld funds, that is 20    |
| past-due benefits, but *before*  |     percent, are considered to be |
| the remaining 20 percent is sent |     benefits that were actually   |
| to either the claimant or        |     paid prior to the claimant's  |
| his/her attorney                 |     death, and                    |
|                                  |                                   |
|                                  | -   attorney may be entitled to   |
|                                  |     payment of fees (if all legal |
|                                  |     requirements are met) for     |
|                                  |     representation of the         |
|                                  |     deceased claimant.            |
+----------------------------------+-----------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

  -----------------------------------------------------------------------
  d\. Claimant Death (continued)

  -----------------------------------------------------------------------

+----------------------------------+-----------------------------------+
| If the claimant dies after...    | Then the ...                      |
+----------------------------------+-----------------------------------+
| the date of the rating decision, | -   only past-due benefits        |
| but *before* it is authorized    |     payable would be payable as   |
|                                  |     accrued benefits under [38    |
|                                  |     U.S.C.                        |
|                                  |     5121,](http://www4.law        |
|                                  | .cornell.edu/uscode/38/5121.html) |
|                                  |     and                           |
|                                  |                                   |
|                                  | -   attorney would be entitled to |
|                                  |     fees if the accrued benefits  |
|                                  |     claimant has signed a fee     |
|                                  |     agreement with the attorney.  |
+----------------------------------+-----------------------------------+

+------------+---------------------------------------------------------+
| ##         | > Notify the claimant and his/her attorney when the     |
| ### e. Not | > money is released for attorney fees and state the     |
| ification  | > following:                                            |
| of Claiman |                                                         |
| t and Atto | > "*In accordance with our decision dated*              |
| rney {#e.- | > ***\[date\]***, *a check for attorney fees has been*  |
| notificati | > ***\[or will be\]*** *released by Finance.*"          |
| on-of-clai |                                                         |
| mant-and-a | > ***Note***: The claimant and his/her attorney may be  |
| ttorney .u | > contacted by telephone or in writing.                 |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

+------------+---------------------------------------------------------+
| #####      | > When it is determined that an attorney is entitled to |
| f. Need fo | > payment of attorney fees for an inclusive past-due    |
| r Subseque | > benefits period, attorney fees might be payable       |
| nt Decisio | > *without* a new decision for any additional benefits  |
| ns Based o | > that arise from the same issue.                       |
| n New Rati |                                                         |
| ng Decisio | > Use the table below to determine how to handle        |
| ns {#f.-ne | > eligibility decisions based on new ratings.           |
| ed-for-sub |                                                         |
| sequent-de |                                                         |
| cisions-ba |                                                         |
| sed-on-new |                                                         |
| -rating-de |                                                         |
| cisions .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+----------------------------------+-----------------------------------+
| If the ...                       | Then the ...                      |
+----------------------------------+-----------------------------------+
| -   attorney representative is   | attorney fees will be paid from   |
|     found to be entitled to fees | the supplemental payment without  |
|     following an original grant  | a new decision.                   |
|     of service connection        |                                   |
|                                  |                                   |
| -   disability evaluation is     |                                   |
|     appealed and subsequently    |                                   |
|     increased                    |                                   |
|                                  |                                   |
| -   attorney represents the      |                                   |
|     claimant in the appeal, and  |                                   |
|                                  |                                   |
| -   effective date of the        |                                   |
|     increase is the date of the  |                                   |
|     original award               |                                   |
+----------------------------------+-----------------------------------+
| -   VA is paying an amount for   | attorney is entitled to fees from |
|     dependency, and              | the additional amount payable for |
|                                  | dependents.                       |
| -   attorney was entitled to     |                                   |
|     fees for the initial award   |                                   |
+----------------------------------+-----------------------------------+

+-----------------------------------------------------------------------+
| > ***Reference***: For case examples of subsequent decisions based on |
| > new rating decisions, see M21-1MR, Part I, 3.C.18.g.                |
+-----------------------------------------------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

+------------+---------------------------------------------------------+
| ##### g.   | > The table below describes examples of subsequent      |
| Examples:  | > decisions based on new ratings.                       |
| Subsequent |                                                         |
|  Decisions |                                                         |
|  Based on  |                                                         |
| New Rating |                                                         |
|  Decisions |                                                         |
+------------+---------------------------------------------------------+

+----------+-----------------------------------------------------------+
| Example  | Description                                               |
+----------+-----------------------------------------------------------+
| 1        | > ***Situation***                                         |
|          | >                                                         |
|          | > Following an increase from 10 percent to 50 percent for |
|          | > PTSD, attorney fees were awarded for the period from    |
|          | > 01/10/1992 through 04/25/1995. Subsequently, the RO     |
|          | > received notification of the claimant's marriage on     |
|          | > 03/5/1993.                                              |
|          | >                                                         |
|          | > ***Result***                                            |
|          | >                                                         |
|          | > The RO pays 80 percent of the additional amount for a   |
|          | > spouse to the claimant for the period 04/1/1993 through |
|          | > 04/25/1995. The attorney is paid 20 percent of the      |
|          | > additional amount for the period 04/1/1993 through      |
|          | > 04/25/1995. A new decision does *not* need to be made.  |
+----------+-----------------------------------------------------------+
| 2        | > ***Situation***                                         |
|          | >                                                         |
|          | > Following an award of pension benefits at the monthly   |
|          | > rate of \$100.00 retroactive to 03/5/1990, attorney     |
|          | > fees were paid for the period 03/5/1990 through         |
|          | > 07/10/1994. Subsequently, the claimant submits a        |
|          | > revised income statement because of paid medical        |
|          | > expenses. The RO determines that the claimant is        |
|          | > entitled to monthly pension benefits at the rate of     |
|          | > \$200.00 retroactive to 01/1/1991.                      |
|          | >                                                         |
|          | > ***Result***                                            |
|          | >                                                         |
|          | > The RO pays 80 percent of the additional amount to the  |
|          | > claimant and 20 percent to the attorney for the period  |
|          | > 01/1/1991 through 07/10/1994. Effective 07/11/1994, the |
|          | > claimant will be paid 100 percent of the benefits. A    |
|          | > new decision does *not* need to be made.                |
+----------+-----------------------------------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

  -----------------------------------------------------------------------
  g\. Examples: Subsequent Decisions Based on New Rating Decisions
  (continued)

  -----------------------------------------------------------------------

+----------+-----------------------------------------------------------+
| Example  | Description                                               |
+----------+-----------------------------------------------------------+
| 3        | > ***Situation***                                         |
|          | >                                                         |
|          | > Following an original grant of service-connected        |
|          | > benefits, an attorney is found entitled to fees for the |
|          | > period from 02/10/1998, the date of the rating          |
|          | > decision. Subsequently, the attorney files a NOD with   |
|          | > the evaluation and an increase, effective from          |
|          | > 02/10/1998, is awarded in a rating decision dated       |
|          | > 11/14/2000.                                             |
|          | >                                                         |
|          | > ***Result***                                            |
|          | >                                                         |
|          | > The attorney is entitled to 20 percent of the past-due  |
|          | > benefits awarded for the period 02/10/1998 through      |
|          | > 11/14/2000. A new decision does *not* need to be made.  |
+----------+-----------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### h.   | > If the claimant or his/her attorney files an NOD      |
| Responding | > regarding the decision                                |
|  to an NOD |                                                         |
|            | -   prepare a statement of the case (SOC) explaining    |
|            |     the decision                                        |
|            |                                                         |
|            | -   include a copy of [38 U.S.C.                        |
|            |     5904](http://straylight.law.cornell.edu             |
|            | /uscode/html/uscode38/usc_sec_38_00005904----000-.html) |
|            |     and [38 CFR                                         |
|            |     20.609,](http://ww                                  |
|            | w.warms.vba.va.gov/regs/38CFR/BOOKA/PART20/S20_609.DOC) |
|            |     and                                                 |
|            |                                                         |
|            | -   allow the claimant 30 days to reply with a          |
|            |     substantive appeal or *VA Form 9*.                  |
|            |                                                         |
|            | > ***Reference***: For more information on preparing a  |
|            | > SOC, see M21-1MR, Part I, 5.D.                        |
+------------+---------------------------------------------------------+

Continued on next page

18\. Releasing the Money and Responding to Disagreements, Continued

+------------+---------------------------------------------------------+
| ##         | > If the claimant complains that the fee is excessive   |
| ### i. Res | > or unreasonable                                       |
| ponding to |                                                         |
|  Complaint | -   send the claimant a letter explaining that issues   |
|  of Excess |     relating to the reasonableness or excessiveness of  |
| ive or Unr |     the fee are within the jurisdiction of BVA          |
| easonable  |                                                         |
| Fees {#i.- | -   do *not* send or forward the claimant's letter to   |
| responding |     BVA, and                                            |
| -to-compla |                                                         |
| int-of-exc | -   refer the claimant to BVA at the following address: |
| essive-or- |                                                         |
| unreasonab | > Office of the Senior Deputy Vice Chairman (012)       |
| le-fees .u | >                                                       |
| nnumbered} | > Board of Veterans' Appeals                            |
|            | >                                                       |
|            | > 810 Vermont Ave                                       |
|            | >                                                       |
|            | > Washington, DC 20420.                                 |
+------------+---------------------------------------------------------+

#### 19. Failure to Withhold Past-Due Benefits When a Fee Agreement Exists {#failure-to-withhold-past-due-benefits-when-a-fee-agreement-exists .unnumbered}

+------------+---------------------------------------------------------+
| ##### In   | > This topic contains information on how to handle      |
| troduction | > situations where past-due benefits are not withheld   |
|  {#introdu | > and there is a direct pay fee agreement, including    |
| ction-5 .u |                                                         |
| nnumbered} | -   initial action when failure to withhold past-due    |
|            |     benefits is discovered                              |
|            |                                                         |
|            | -   deciding attorney fee eligibility                   |
|            |                                                         |
|            | -   handling situations where the attorney is not       |
|            |     legally entitled to fees                            |
|            |                                                         |
|            | -   handling situations where the attorney is entitled  |
|            |     to fees, and                                        |
|            |                                                         |
|            | -   finance activity procedures for payment of attorney |
|            |     fees from the VA fund.                              |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### C    | > June 19, 2006                                         |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a. I | > When it is discovered that past-due benefits have     |
| nitial Act | > been paid to the claimant before attorney fee         |
| ion When F | > eligibility is decided, immediately contact the       |
| ailure to  | > claimant and attempt to recover 20 percent of the     |
| Withhold P | > past-due benefits.                                    |
| ast-Due Be |                                                         |
| nefits Is  | > If the claimant sends the money back, follow the      |
| Discovered | > normal procedures for payment of attorney fees.       |
|  {#a.-init |                                                         |
| ial-action | > ***Reference***: For more information on the payment  |
| -when-fail | > of attorney fees, see M21-1MR, Part I, 3.C.18.        |
| ure-to-wit |                                                         |
| hhold-past |                                                         |
| -due-benef |                                                         |
| its-is-dis |                                                         |
| covered .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### b.   | > Immediately prepare an attorney fee eligibility       |
|  Determina | > decision in cases where there was a failure to        |
| tion of El | > withhold past-due benefits and a direct pay fee       |
| igibility  | > agreement exists.                                     |
| to Attorne |                                                         |
| y Fees {#b | > ***Reference***: For more information on the Attorney |
| .-determin | > Fee Eligibility decision format, see M21-1MR, Part I, |
| ation-of-e | > 3.C.20.                                               |
| ligibility |                                                         |
| -to-attorn |                                                         |
| ey-fees .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

Continued on next page

19\. Failure to Withhold Past-Due Benefits When a Fee Agreement Exists,
Continued

+------------+---------------------------------------------------------+
| ##         | > In cases where eligibility to attorney fees does not  |
| ### c. Att | > exist send the attorney                               |
| orney Not  |                                                         |
| Legally En | -   a copy of the attorney fee eligibility decision at  |
| titled to  |     M21-1MR, Part I, 3.C.20,                            |
| Fees {#c.- |                                                         |
| attorney-n | -   notice of the decision M21-1MR, Part I, 3.C.22, and |
| ot-legally |                                                         |
| -entitled- | -   *VA Form 4107, Your Rights to Appeal Our Decision.* |
| to-fees .u |                                                         |
| nnumbered} |     > ***Important***: Do not send a copy to the        |
|            |     > claimant since the claimant's benefits are no     |
|            |     > longer involved.                                  |
|            |                                                         |
|            |     > ***Note***: The appeal period is one year, not 60 |
|            |     > days, since only the attorney is involved in the  |
|            |     > claim for fees.                                   |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### d.   | > The table below describes the steps for payment of    |
|  Attorney  | > attorney fees in cases where VA failed to withhold    |
| Entitled t | > from past-due benefits and the attorney is legally    |
| o Fees {#d | > entitled to fees.                                     |
| .-attorney |                                                         |
| -entitled- |                                                         |
| to-fees .u |                                                         |
| nnumbered} |                                                         |
+------------+---------------------------------------------------------+

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 1     | > Has a one-time EAJA payment has been made to the attorney  |
|       | > on the same issue?                                         |
|       |                                                              |
|       | > ***Note***: This information can be obtained by checking   |
|       | > with the finance activity, or the TINQ screen.             |
|       |                                                              |
|       | -   If *yes*, then go to step 2.                             |
|       |                                                              |
|       | -   If *no*, go to step 3.                                   |
+-------+--------------------------------------------------------------+

Continued on next page

19\. Failure to Withhold Past-Due Benefits When a Fee Agreement Exists,
Continued

  -----------------------------------------------------------------------
  d\. Attorney Entitled to Fees (continued)

  -----------------------------------------------------------------------

+-------+--------------------------------------------------------------+
| Step  | Action                                                       |
+-------+--------------------------------------------------------------+
| 2     | > Was the amount of the EAJA payment more than the 20        |
|       | > percent that should have been withheld from past due       |
|       | > benefits?                                                  |
|       |                                                              |
|       | -   If *yes*, do not pay the attorney any amount--even if    |
|       |     the attorney is otherwise eligible for fees. In this     |
|       |     case                                                     |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   send the attorney a copy of the decision on attorney     |
|       |     fees using the format in Exhibit 5.                      |
|       |                                                              |
|       | -   notify the attorney (not the claimant) of the decision   |
|       |     using the format in Exhibit 6, and                       |
|       |                                                              |
|       | -   provide *VA Form 4107, Your Rights to Appeal Our         |
|       |     Decision*.                                               |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   If *no*,                                                 |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   send only the amount of the 20 percent that is over and  |
|       |     above the EAJA payment, and                              |
|       |                                                              |
|       | -   use the decision format in Exhibit 1 and the letter      |
|       |     format in Exhibit 4, but explain in both documents that  |
|       |     the amount being sent to the attorney has been reduced   |
|       |     by the amount of the EAJA payment.                       |
+-------+--------------------------------------------------------------+
| 3     | If no EAJA fees were paid                                    |
|       |                                                              |
|       | -   send the attorney (not the claimant)                     |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   a copy of the attorney fee eligibility decision using    |
|       |     Exhibit 1                                                |
|       |                                                              |
|       | -   notification of the decision using Exhibit 4, and        |
|       |                                                              |
|       | -   *VA Form 4107*.                                          |
|       |                                                              |
|       | ```{=html}                                                   |
|       | <!-- -->                                                     |
|       | ```                                                          |
|       | -   direct the finance activity to immediately send the      |
|       |     attorney an amount equal to 20percent of the past due    |
|       |     retroactive benefits. Do not wait until the appeal       |
|       |     period ends.                                             |
|       |                                                              |
|       |     ***Note***: The finance activity will pay this money out |
|       |     of VA funds.                                             |
|       |                                                              |
|       |     ***Reference***: For more information on finance         |
|       |     activity procedures, see M21-1MR, Part I, 3.C.19.e.      |
+-------+--------------------------------------------------------------+

Continued on next page

19\. Failure to Withhold Past-Due Benefits When a Fee Agreement Exists,
Continued

+------------+---------------------------------------------------------+
| ##### e.   | > Where past due benefits were erroneously released to  |
|  Finance A | > the claimant and the RO is unable to recover the      |
| ctivity Pr | > money from the claimant, the finance activity will    |
| ocedure fo | > follow the steps in the table below as outlined by    |
| r Payment  | > the central office finance activity.                  |
| of Attorne | >                                                       |
| y Fees Fro | > Questions regarding these steps should be directed to |
| m VA Funds | > Joe Miller at 202-273-7309.                           |
+------------+---------------------------------------------------------+

  -------- --------------------------------------------------------------
  Step     Action

  1        The finance activity will input 06A Transaction using the F15
           screen in BDN for the amount to be paid to the attorney.

  2        The finance activity will use the compensation and pension
           appropriate 36X0102, cost code AF (as of August 6, 2002).
  -------- --------------------------------------------------------------

#### 20. Exhibit 1: Attorney Fee Eligibility Decision Format

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > The attorney fee eligibility decision format is       |
| Attorney F | > below.                                                |
| ee Eligibi |                                                         |
| lity Decis |                                                         |
| ion Format |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **Decision Format**                                                 |
| >                                                                     |
| > **The issue**: Entitlement to payment of attorney fees from         |
| > past-due benefits                                                   |
| >                                                                     |
| > **Decision**: Entitlement to payment by VA of attorney fees from    |
| > past-due benefits is **\[granted/denied\]**. The attorney should be |
| > paid 20% of past-due benefits awarded the veteran by reason of the  |
| > award of **\[benefit\],** dated **\[date\]**. The entire amount     |
| > (100%) of past due benefits is **\[amount\]**, 20 % of this amount  |
| > is **\[amount**\]. The past-due benefits period begins on           |
| > **\[date\]**, the effective date of the award, and ends             |
| > **\[date\]**, the date of the **\[rating decision/ BVA decision/    |
| > Court decision\]**.                                                 |
| >                                                                     |
| > **Reasons for decision:**                                           |
| >                                                                     |
| > For an attorney to be entitled to payment of attorney fees by VA,   |
| > the record must show that the requirements of 38 USC 5904 and 38    |
| > CFR 20.609 have been met. Those requirements are listed below.      |
| > After each listed condition, we have noted whether the condition    |
| > has been met in this case.                                          |
| >                                                                     |
| > 20.609(c) requires that the following two conditions be met:        |
| >                                                                     |
| > 1\) There must have been a final Board of Veterans' Appeals (BVA)   |
| > decision in the case.                                               |
|                                                                       |
| -   The BVA decision was issued on **\[date\]**, or                   |
|                                                                       |
| -   There was no BVA decision.                                        |
|                                                                       |
| > 2\) The attorney (or another attorney acting in continuous          |
| > prosecution) must have been hired within one year following the BVA |
| > decision or while the case at the Court.                            |
|                                                                       |
| -   In this case, the attorney was hired on **\[date\]**              |
|                                                                       |
| -   In this case, the attorney was hired while the case was at the    |
|     Court, or                                                         |
|                                                                       |
| -   In this case, the attorney was hired within one year or while the |
|     case was at the Court.                                            |
|                                                                       |
| > 3\) The total amount of the fee may not exceed 20%.                 |
|                                                                       |
| -   In this case, the fee was 20% or less.                            |
|                                                                       |
| > 4\) The total amount of the fee must be contingent on a favorable   |
| > outcome.                                                            |
|                                                                       |
| -   In this case, the fee is contingent on a favorable outcome.       |
|                                                                       |
| > 5\) The past due benefits must result in a cash payment to the      |
| > claimant.                                                           |
|                                                                       |
| -   If this condition is not met, explain why.                        |
+-----------------------------------------------------------------------+

#### 21. Exhibit 2: Attorney Fee Eligibility Notice Letter-Claimant

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a    | > The attorney fee eligibility notice letter-claimant   |
| . Attorney | > is below.                                             |
|  Fee Eligi |                                                         |
| bility Not |                                                         |
| ice Letter |                                                         |
| --Claimant |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **\[Claimant's Name\]**                                             |
| >                                                                     |
| > **\[Claimant's Address\]**                                          |
| >                                                                     |
| > Dear **\[Claimant\]**:                                              |
| >                                                                     |
| > **What We Granted**                                                 |
| >                                                                     |
| > We have determined that your attorney is entitled to **\[amount\]** |
| > for attorney fees. These attorney fees are payable from the         |
| > effective date of the award of **\[service connection for XXXX\]**, |
| > which is **\[effective date\]** through **\[date\]**, the date of   |
| > the VA **\[or Court\]** decision which awarded this benefit. The    |
| > balance of the past due benefits **\[or XXXX\]** **\[is being       |
| > sent/has already been sent\]** to you.                              |
| >                                                                     |
| > **What We Denied and Why**                                          |
| >                                                                     |
| > We have determined that your attorney is not eligible for attorney  |
| > fees. This is because **\[cite reason, for example "There has never |
| > been a Board of Veterans' Appeals Decision on the issue for which   |
| > you were granted VA benefits, which is service connection for       |
| > XXXX"\]**.                                                          |
| >                                                                     |
| > **How We Made Our Decision**                                        |
| >                                                                     |
| > We carefully considered **\[list the evidence received from         |
| > claimant and attorney\]** we received from you or your attorney. We |
| > also reviewed the fee agreement between you and your attorney to    |
| > determine if it complied with the law, 38 U.S.C. 5904 and 38 CFR    |
| > 20.609. The attached attorney fee eligibility decision explains     |
| > exactly how we reached our decision.                                |
| >                                                                     |
| > **If You Think We Are Wrong**                                       |
| >                                                                     |
| > If you disagree with this determination, you may file a notice of   |
| > disagreement (NOD). A NOD is a letter telling this office that you  |
| > disagree with the decision. To initiate appellate review, a NOD     |
| > must be filed with this office within 60 days after the date of     |
| > this letter. Since there is more than one party who may claim       |
| > entitlement to the money being withheld as attorney fees in this    |
| > case, the provisions relating to simultaneously contested claims    |
| > are being applied. See 38 U.S.C. 7105A.                             |
+-----------------------------------------------------------------------+

#### 22. Exhibit 3: Attorney Fee Eligibility Notice Letter-Attorney

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The attorney fee eligibility notice letter-attorney   |
| a. Attorne | > is below.                                             |
| y Fee Elig |                                                         |
| ibility No |                                                         |
| tice Lette |                                                         |
| r-Attorney |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **\[Attorney's Name\]**                                             |
| >                                                                     |
| > **\[Attorney's Address\]**                                          |
| >                                                                     |
| > Dear **\[Attorney\]**:                                              |
| >                                                                     |
| > **What We Granted**                                                 |
| >                                                                     |
| > We have determined that you are entitled to **\[amount\]** for      |
| > attorney fees. These attorney fees are payable from the effective   |
| > date of the award of **\[service connection for XXXX\]**, which is  |
| > **\[effective date\]**, through **\[date\]**, the date of the VA    |
| > **\[or Court\]** decision which awarded this benefit. The balance   |
| > of the past due benefits **\[or XXXX\]** **\[is being sent/has      |
| > already been sent\]** directly to the claimant.                     |
| >                                                                     |
| > **What We Denied and Why**                                          |
| >                                                                     |
| > We have determined that you are not eligible for attorney fees.     |
| > This is because **\[cite reason, for example "There has never been  |
| > a Board of Veterans' Appeals Decision on the issue for which your   |
| > client was granted VA benefits, which is service connection for     |
| > XXXX"\]**.                                                          |
| >                                                                     |
| > **How We Made Our Decision**                                        |
| >                                                                     |
| > We carefully considered **\[list the evidence received from veteran |
| > and attorney\]** we received from you or your client. We also       |
| > reviewed the fee agreement between you and your client to determine |
| > if it complied with the law, 38 U.S.C. 5904 and 38 CFR 20.609. The  |
| > attached attorney fee eligibility decision explains exactly how we  |
| > reached our decision.                                               |
| >                                                                     |
| > **If You Think We Are Wrong**                                       |
| >                                                                     |
| > If you disagree with this determination, you may file a notice of   |
| > disagreement (NOD). A NOD is a letter telling this office that you  |
| > disagree with the decision. To initiate appellate review, a NOD     |
| > must be filed with this office within 60 days after the date of     |
| > this letter. Since there is more than one party who may claim       |
| > entitlement to the money being withheld as attorney fees in this    |
| > case, the provisions relating to simultaneously contested claims    |
| > are being applied. See 38 U.S.C. 7105A.                             |
+-----------------------------------------------------------------------+

#### 23. Exhibit 4: Attorney Fee Eligibility Notice Letter--Attorney, Failure to Withhold Past-Due Benefits

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| #####      | > The attorney fee eligibility notice letter--attorney, |
| a. Attorne | > failure to withhold past-due benefits is below.       |
| y Fee Elig |                                                         |
| ibility No |                                                         |
| tice Lette |                                                         |
| r--Attorne |                                                         |
| y, Failure |                                                         |
|  to Withho |                                                         |
| ld Past-Du |                                                         |
| e Benefits |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **\[Attorney's Name\]**                                             |
| >                                                                     |
| > **\[Attorney's Address\]**                                          |
| >                                                                     |
| > Dear **\[Attorney\]**:                                              |
| >                                                                     |
| > **What We Granted**                                                 |
| >                                                                     |
| > We have determined that you are entitled to **\[amount\]** for      |
| > attorney fees. These attorney fees are payable from the effective   |
| > date of the award of **\[service connection for XXXX\]**, which is  |
| > **\[effective date\]**, through **\[date\]**, the date of the VA    |
| > **\[or Court\]** decision which awarded this benefit. We failed to  |
| > withhold any portion of the claimant's past due benefits for        |
| > payment of attorney fees from the rating decision dated             |
| > **\[date\]**. As a result, we are paying you attorney fees in the   |
| > amount of **\[amount\]** from VA funds. This amount should be sent  |
| > to you in the near future.                                          |
| >                                                                     |
| > **What We Denied and Why**                                          |
| >                                                                     |
| > **\[Explain denial here\]**                                         |
| >                                                                     |
| > **How We Made Our Decision**                                        |
| >                                                                     |
| > We carefully considered **\[list the evidence received from veteran |
| > and attorney\]** we received from you or your client. We also       |
| > reviewed the fee agreement between you and your client to determine |
| > if it complied with the law, 38 U.S.C. 5904 and 38 CFR 20.609. The  |
| > attached attorney fee eligibility decision explains exactly how we  |
| > reached our decision.                                               |
| >                                                                     |
| > **If You Think We Are Wrong**                                       |
| >                                                                     |
| > If you disagree with this determination, you may file a notice of   |
| > disagreement (NOD). See the attached VA Form 4107 for your appeal   |
| > rights.                                                             |
+-----------------------------------------------------------------------+

#### 24. Exhibit 5: Attorney Fee Eligibility Decision Format--Failure to Withhold Past-Due Benefits

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a.   | > Page 1 of the attorney fee eligibility decision       |
|  Attorney  | > format--failure to withhold past-due benefits is      |
| Fee Eligib | > below.                                                |
| ility Deci |                                                         |
| sion Forma |                                                         |
| t--Failure |                                                         |
|  to Withho |                                                         |
| ld Past-Du |                                                         |
| e Benefits |                                                         |
|  -- Page 1 |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **Decision Format**                                                 |
| >                                                                     |
| > **The issue**: Entitlement to payment of attorney fees from         |
| > past-due benefits                                                   |
| >                                                                     |
| > **Decision**: This decision is in reference to the rating decision  |
| > dated **\[date\]**, which awarded **\[benefit\]**. The entire       |
| > amount (100%) of past due benefits was **\[amount\]**. VA failed to |
| > withhold any amount for attorney fees and the entire amount was     |
| > released to the claimant. Although legal criteria for payment of    |
| > fees have been met, entitlement to payment by VA of attorney fees   |
| > from past due benefit is denied because payment of **\[amount\]**   |
| > Equal Access to Justice Act (EAJA) fees on **\[date\]** exceeded    |
| > the amount of attorney fees that would have been payable out of     |
| > past due benefits. The amount of attorney fees that would have been |
| > payable out of this amount is **\[amount\]**. The past due benefits |
| > period began on **\[date\]**, the effective date of the award, and  |
| > ended **\[date\]**, the date of the rating **\[rating decision/ BVA |
| > decision/ Court decision\]**.                                       |
| >                                                                     |
| > **Reasons for decision:**                                           |
| >                                                                     |
| > For an attorney to be entitled to payment of attorney fees by VA,   |
| > the record must show that the requirements of 38 USC 5904 and 38    |
| > CFR 20.609 have been met. Those requirements are listed below.      |
| > After each listed condition, we have noted whether the condition    |
| > has been met in this case.                                          |
+-----------------------------------------------------------------------+

Continued on next page

24\. Exhibit 5: Attorney Fee Eligibility Decision Format--Failure to
Withhold Past-Due Benefits, Continued

+------------+---------------------------------------------------------+
| ##### b.   | > Page 2 of the attorney fee eligibility decision       |
|  Attorney  | > format--failure to withhold past-due benefits is      |
| Fee Eligib | > below.                                                |
| ility Deci |                                                         |
| sion Forma |                                                         |
| t--Failure |                                                         |
|  to Withho |                                                         |
| ld Past-Du |                                                         |
| e Benefits |                                                         |
|  -- Page 2 |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > 20.609(c) requires that the following two conditions be met:        |
| >                                                                     |
| > 1\) There must have been a final Board of Veterans' Appeals (BVA)   |
| > decision in the case.                                               |
|                                                                       |
| -   The BVA decision was issued on \[date\], or                       |
|                                                                       |
| -   There was no BVA decision.                                        |
|                                                                       |
| > 2\) The attorney (or another attorney acting in continuous          |
| > prosecution) must have been hired within one year following the BVA |
| > decision or while the case at the Court.                            |
|                                                                       |
| -   In this case, the attorney was hired on \[date\]                  |
|                                                                       |
| -   In this case, the attorney was hired while the case was at the    |
|     Court, or                                                         |
|                                                                       |
| -   In this case, the attorney was hired within one year or while the |
|     case was at the Court.                                            |
|                                                                       |
| > 3\) The total amount of the fee may not exceed 20%.                 |
|                                                                       |
| -   In this case, the fee was 20% or less.                            |
|                                                                       |
| > 4\) The total amount of the fee must be contingent on a favorable   |
| > outcome.                                                            |
|                                                                       |
| -   In this case, the fee is contingent on a favorable outcome.       |
|                                                                       |
| > 5\) The past due benefits must result in a cash payment to the      |
| > claimant.                                                           |
|                                                                       |
| -   If this condition is not met, explain why.                        |
|                                                                       |
| > **Payment prohibited if EAJA payment has been made**                |
| >                                                                     |
| > The Federal Courts Administration Act of 1992, Pub.L.No. 102-572,   |
| > 506(c), 106 Stat. 4506, 4513 reads:                                 |
| >                                                                     |
| > \(c\) Fee Agreements. Section 5904(d) of title 38, United States    |
| > Code, shall not prevent an award of fees and other expenses under   |
| > section 2412(d) of title 28, United States Code. Section 5904(d) of |
| > title 38, United States Code, shall not apply with respect to any   |
| > such award but only if, where the claimant's attorney receives fees |
| > for the same work under both section 5904 of title 38, United       |
| > States Code, and section 2412(d) of title 28, United States Code,   |
| > the claimant's attorney refunds to the claimant the amount of the   |
| > smaller fee. In this case the amount of the EAJA fees paid exceeded |
| > the amount that would have been paid from past due benefits.        |
+-----------------------------------------------------------------------+

#### 25. Exhibit 6: Attorney Fee Eligibility Notice Letter--Attorney, EAJA Payment Exceeds 20 Percent

+------------+---------------------------------------------------------+
| ##### C    | > August 17, 2004; Change #9                            |
| hange Date |                                                         |
+------------+---------------------------------------------------------+

+------------+---------------------------------------------------------+
| ##### a. A | > The attorney fee eligibility notice letter--attorney, |
| ttorney Fe | > EAJA payment exceeds 20 percent is below.             |
| e Eligibil |                                                         |
| ity Notice |                                                         |
|  Letter--A |                                                         |
| ttorney, E |                                                         |
| AJA Paymen |                                                         |
| t Exceeds  |                                                         |
| 20 Percent |                                                         |
+------------+---------------------------------------------------------+

+-----------------------------------------------------------------------+
| > **\[Attorney's Name\]**                                             |
| >                                                                     |
| > **\[Attorney's Address\]**                                          |
| >                                                                     |
| > Dear **\[Attorney\]**:                                              |
| >                                                                     |
| > **What We Denied and Why**                                          |
| >                                                                     |
| > We failed to withhold any portion of the claimant's past due        |
| > benefits for payment of attorney fees from the rating decision      |
| > dated **\[date\]**. Although you meet the legal criteria for        |
| > payment of attorney fees from the retroactive benefits paid for the |
| > rating decision dated **\[date of rating\]**, we are denying        |
| > payment of attorney fees since you received a payment of Equal      |
| > Access to Justice Act (EAJA) fees on **\[date\]**. The amount of    |
| > EAJA fees you received was **\[amount\]**. The amount of attorney   |
| > fees due from the **\[date of rating\]** rating decision is         |
| > **\[amount\]**. The EAJA fees exceed the amount of attorney fees    |
| > that would have been due from past due benefits. Accordingly, we    |
| > must deny payment of fees.                                          |
| >                                                                     |
| > **How We Made Our Decision**                                        |
| >                                                                     |
| > We carefully considered **\[list the evidence received from veteran |
| > and attorney\]** we received from you or your client. We also       |
| > reviewed the fee agreement between you and your client to determine |
| > if it complied with the law, 38 U.S.C. 5904 and 38 CFR 20.609. We   |
| > also applied the provisions of the Federal Courts Administration    |
| > Act of 1992, Pub.L. No. 102-572, 506(c), 106 Stat. 4506,4513 and we |
| > determined that the amount of EAJA fees paid exceed the amount of   |
| > attorney fees that would have been payable out of past due          |
| > benefits. The attached attorney fee eligibility decision explains   |
| > exactly how we reached our decision.                                |
| >                                                                     |
| > **If You Think We Are Wrong**                                       |
| >                                                                     |
| > If you disagree with this determination, you may file a notice of   |
| > disagreement (NOD). See the attached VA Form 4107 for your appeal   |
| > rights.                                                             |
+-----------------------------------------------------------------------+