UNITED STAT ES COURT OF AP P EALS FOR VETERANS CLAIMS

N O
. 97-875
M I T CH ELL S CATES , J R ., A PP EL L ANT ,

V
. H ER SH EL W. G OBER , A C TI NG S EC RE T A RY O F V ET ER A N S A FF A I RS , A PPEL L EE
. KEN NE TH B. M AS ON , J R ., I NTER VE NOR
.
On Interve nor' s Motion for Review En B anc
(Argued June 7, 2000 Dec ided August 14, 2000 )

Mitchell Scate

s , pr o s e . R. Ra nd all Cam pb e ll , w ithwh om Robert E. Coy , ActingGene ral Counsel; and Ron Garvin, Assistant Gener al Counsel, all of Washington, D.C., we re on the brief, f or the a ppellee. Kenneth M. Carpenter, of Topeka , Kansa s, was on the br ief for Kenne th B. Mason, Jr., as intervenor

. Jame s C. McKay, of

Was hin g ton , D .C. , w a s on the br ie f a s amic us c ur ia e fo r t he a pp e lla nt. Be fo re N EBE KER, Chief Judge, and KR AM ER, F ARL EY , H OL DA WAY , IVE RS, STEI NB ERG, and GREENE, J ud ge s. NEB EKER, Chief Judge : This appeal i n v o l v es a dispute between the appellant, ve tera n Mitchell Scates, and the intervenor and appe llant's f

ormer att orney , Kenne th Mason, over a 20% conting ent fe e agree ment. Mr. Scates appea ls a n April 30, 1997, Boa

rd of Ve tera

ns' Appea ls (Boa

rd or B VA ) de cision which dete rmined that Mr. Mason was elig ible for the pa y ment of attorne y

fee s withheld by the S ecr etar

y from past-due benefits, purportedly pursuant to 38 U.S.C. § 5904(d)(3), fo r l e g a l se rv ic e s r e nd e re d by Mr

. Ma so n on be ha lf of Mr . Sc a te s. In O c tob e r 1 99 9, a pa ne l of thi s Court reve rsed the B oard de cision; the C ourt held that the fe e agree ment had bee n abrog ated upon2

the termi n at i o n of the attorney -client re lationship in 1994 and that no right to the 20% conting ent fee survived. Th e int e rv e no r s ou g ht a nd wa s g ra nte d r e vie w b y

the fu ll Co ur

t. Sc ate s v. W est , 13 Vet.App. 304 (2000) (e n banc or der) , withdraw ing 13 Vet.App. 98 ( 1999). The inter venor the n filed a motion t o d i s m i s s this appeal be cause , he ar g ued, the B oard, a nd there fore this Court, l acke d jur isd ic tio n to de c ide tha

t he wa s e lig ibl e to r e c e ive the wi thh e ld f e e . Si nc e it i s a

pp ro pr iate to r a ise this jurisdi ctional issue at any time during the pende ncy of the appea l, w e enter

tain it, ag ree that the Boa rd l acke d jurisdiction in this matter, a nd will vacate the B oard de cision, with directions. See I n the Matter of the Fe e Agree ment of W ick, 40 F.3d 367, 370 ( Fe d. Cir. 1994).

I

. A re view of the rec ord on appe al re veals that in April 1996, a VA re gi o n al offic e (RO) "pr ocesse d an awa

rd in the amount [of $154,119.00]" on be half of the appellant. Rec ord (R.) at 98. Pur su ant t o th e c on tin g e nt f e e a g re e me nt o n fil e , the RO " wi thh e ld $30 ,8 23 .0 0 f ro m [th e a pp e lla nt' s]
re tr oa c tiv e be ne fi ts pending a dec ision by the Board o f V et er ans Appeals on the issue of your attorney's entitlement to di rect pay men t out of th e pas t- du e am ou nt ." Id. (e mph a sis a dd e d) . T he RO further informed the a

ppellant that " the re cords in this case [were] being transfe rre d to the B oard of Ve te ra ns Ap pe a ls for

a d e te rm ina tio n o

f e lig ibi lit

yfor pa y me nt o f at tor ne yfe es from any

past-due benef its." R. at 99 (e mphasis added) . In April 1997, the Boa rd deter mined that the interve nor wa s

" e li gi bl e fo r pa

y me nt o f at tor ne yfe es from past-due benef its." R. at 2 (e mphasis added) . The
a pp e lla nt h a d d isc ha

rg e d h im n e arl y tw o y e ars be fo re the RO g ra nte d th e lon g -d isp ute d b e ne fi ts w ith f u l l r e tr o a c t i v i ty, an d th e f

e e a g r e e m e n ti s s i l e n to np aym e n to f f e e s u p o nt e r m i n a t i o no f

th e a t t o r n e yc lie nt r e latio ns hip . T he g ra vame n o f t

he int e rv e no r' s argume nt i s tw of old : F ir st, the S ecret ary

is require d by

statute to decide whether to awa rd a withheld conting ency fee prior to any

revie w by

the Boa rd, and, se cond, the B oard, a s part of its orig inal jurisdiction, is authoriz ed to deci d e o n l y the
re a so na ble ne ss o f t

he fe e , n ot e lig ibi lity

to r e c e ive it. Ti tle 38 of

the Un ite d St a te s Co de g e ne ra lly c on te mpl a te s a

pr og res sio n o f c la ims adjudication fr om the initial decision at the ag ency of orig inal jurisdiction, usually an RO, to review3

by the B oard a cting as a qua si-appellate body

. See 38 U.S.C. §§ 511(a) , 7104(a) ; 38 C.F.R. §§ 19.9, 20 .1 10 4 ( 19 99 ). Spe c if

ic a lly , s e c tio n 5 11 (a ) p ro vid e s in pe rt ine nt p art : The Sec reta

ry shall decide all questions of l aw and fac t nece ssary to a decision by the Se c re tary un de r a law that a ff

e c ts the pr ov isi on

of be ne fi ts b y

the S ecret ary

to veter ans or the de pendents or sur vivors of vete rans. 38 U. S.C. § 5 11 (a ). In tu rn , th e B oa

rd ' s g e ne ra l juri sd ic tio n is lim ite d to the re vie w o f " [a]ll questions in a matter which under section 511(a ) of [titl e 38, U.S. Code,] is subj ect to a de cision by the Secr etar

y ." 38 U.S.C. § 7104. As a depar ture from this normal claim adjudication proc ess, the B oa rd is s pe c if ic a lly pr ov ide d w ithor ig ina l juri sd ic tio n a s to fe e a g re e me nts , to " re vie w" su a sp on te or at the r equest of e ither par ty a fe e agree ment filed with the B oard, a nd it " may order

a re duction in the fee called f

or in the agree ment if the B oard f inds that the fee is ex cessive or unrea sonable." 38 U.S.C. § 5904(c)(2)

.

II. In Cox v . W est , 149 F.3d 1360, 1365 ( Fe d. Cir. 1998), the Unit ed S tates C ourt of Appeals for the F e de ra l Cir c uit (F e de ra l Circ uit ) co ns ide re d an a tto rn e y ' s cla im fo r e nti tle me nt t o a fe e wi thh e ld under se ction 5904(d ) (i

. e. , a dire ct-pa y ment case ). Implicitly

acknow ledg ing the adjudication prog ression at the a g ency level in the conte x t of a claim for dire ct pay ment of a c ontinge ncy

fee by the Secr etar

y , the Fe dera l Circuit concluded that the attorney ' s claim "r equire s the Secre tary to make a deci si on 'und er a l aw t hataffect s t he p rov is io n o f ben efi ts by th e S ecret ary

to ve t e r a n s .'" Id

. (quoting 38 U.S.C. § 511(a)). T he Fe dera l Circuit also noted that section 5904(c )(2) provided the Boa rd only the authority

to reviewfor " re as on ab le ne ss. " Id

. at 1364. The authority to reviewfee ag ree ments for " elig ibilit y " doe s not appea r in t h e s t atut e ( cf

. Norman J. Si ng er, S UTHE R L AND S TATUTOR Y C ONS TR UC TI ON § 47.23 (5 th e d. 19 92 ) ( dis c us sin g the ma xim " e x pr essi o un ius est
exc lusion alt erius ") ); howeve r, under our caselaw, it appea rs t hat eligibility

to char g e a f

ee in nondirec t-pay ment case s may be reviewe d by the BVA i n the first instance as a c omponent of its section 59 04 (c )( 2) a

uth or ity to r e vie w f

or re a so na ble ne ss (see In re Fee Agreem ent of Stanley , 10 Vet.App. 104 (1997))

. In the instant appea l, which involves a dire ct-pa y ment contin g e n c y- f

e e a gr e e me nt, th e a g ency of ori gi n al j u ri s diction never made a decision conc erningthe awa rd of the w ithheld attorney fee s4

to the intervenor

under se ction 511(a) . Rather, the RO f orwa rd ed t h e matter to the Boa rd for a

" de te rm inatio n o f e lig ibi lity ." R. at 99 . T he B oa rd , w hic h h a s th e lim ite d o ri g ina l juri sd ic tio n to revie w fe e agree ments for re asonable ness or e x cessivene ss, concluded that the interven or wa s

" e lig ible for

pa y me nt of attor

ne yfe es from past-due benef its," and, quotingfrom VA G en. Coun. Prec. 22- 95 (Sept. 28, 1995), the Boa rd conclude d that "V A may direc tly pay [t he] attorney

fee s." R. at 2, 9. Be cause we read Coxa s h old ingthat th e B oa rd do e s n ot h ave or ig ina l juri sd ic tio n to consider unde r sec tion 5904(c)( 2) a ny is sues re g ardingentitlement to attorney fee s in direct-pa

y ment
c a se s, we ho ld t

hat a ll i ssu e s invo lvi nge nti tle me nt o r e ligibilit y fo r atto rn e y

fe e s und e r d ir e c tpay ment contin gen cy -fe e agree ments, as contra sted with the issues of re asonable ness and excessiveness, must first be addr essed by the RO in acc ordanc e with t h e n o rm al adjudication proce dures a

nd cannot be the subject of sua sponte or other orig inal (on motion) BV A re view. See Cox, supra; c

f

. In re FeeAgreem ent of Stanley , 10 Vet.App. 104, 108 ( 1997) (in conte x t of nondirec t-pay ment ag ree ment Court affir med B VA' s decision that attorne y was inelig ible for fee s from client bec ause the re w as no final B VA dec ision). The matter

of attorne y

fee s remain s p en ding be fore the Secr etar y by virtue of the f

ee ag ree ment filed in this case . After notice to the appe llant and interve nor, and a n opportunity

to be hear d, that claim should be dec ided by the RO. The a g g rieve d party may then file a

Notice of Disag ree ment and pursue an appe al to the B oard a nd this Court if so desired. See Cox , 149 F.2d at 1362; cf. Hanlin v. United States , __ F.3d. __, __, No. 99-5062, slip op. at 3 (Fe d. Cir. J une 2, 2000) (al ternat iv ely , u nd er 28 U.S .C . § 14 91 (a)(1 ), C ou rtof Fed eral Cl aim s h as j uri sd ict io n t o co ns id er "a non-fr ivolous claim alleg ing the exis tence of a c ontrac t" by "a n attorney

seeking relief for nonpay ment of fe es by

the VA." ). Our de cision today does not dec ide the question of the e ffe ct of the termi n at i on of the attorney -client re lationship between Mr . Mason and Mr. Scates and lea ves that question for de cision at the initial a dminist rative level. Neither does the Court e x press any view as to t he re a so na

ble ne ss o r e xce ssi ve ne ss o f t he fe e c a lle d f

or in t his a g re e me nt s inc e the fact s
s urr o un d i n g s u ch i s s u es mu s tb e d ev el o p edi nth e a d j u d i ca t i o no f t h e p en d i n g cl ai m . T h e B o ar d 's decision is VACATED f

or wa nt of orig inal jurisdiction to decide elig ibilit y fo r d i re ct pay

ment of
a wi th hel d con tin g e nc y

fe e un de r § 59 04 (d ), and the matte r i s RE MA

ND ED to t

he B oa rd wi th direc tions to di smiss t he matter of direc t-pay

ment fee elig ibilit y

as re fer red to the B oard by

the RO. See I n the Matter of the Fe e Agree ment of W ick, supra.