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[Federal Register Volume 88, Number 244 (Thursday, December 21, 2023)]
[Proposed Rules]
[Pages 88295-88300]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28100]

[[Page 88295]]

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 14

RIN 2900-AR93

Fee Reasonableness Reviews; Effect of Loss of Accreditation on 
Direct Payment

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) is issuing this 
proposed rule to address its process for reviewing, determining, and 
allocating reasonable fees for claim representation, and to address the 
effect on direct payment of the termination of an agent's or attorney's 
VA accreditation.

DATES: Comments must be received on or before February 20, 2024.

ADDRESSES: Comments must be submitted through www.regulations.gov. 
Except as provided below, comments received before the close of the 
comment period will be available at www.regulations.gov for public 
viewing, inspection, or copying, including any personally identifiable 
or confidential business information that is included in a comment. We 
post the comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: https://www.regulations.gov. VA will not post on 
Regulations.gov public comments that make threats to individuals or 
institutions or suggest that the commenter will take actions to harm 
the individual. VA encourages individuals not to submit duplicative 
comments. We will post acceptable comments from multiple unique 
commenters even if the content is identical or nearly identical to 
other comments. Any public comment received after the comment period's 
closing date is considered late and will not be considered in the final 
rulemaking.

FOR FURTHER INFORMATION CONTACT: Jonathan Taylor, Office of General 
Counsel (022D), 810 Vermont Avenue NW, Washington, DC 20420, (202) 461-
7699. (This is not a toll-free telephone number.)

SUPPLEMENTARY INFORMATION: Congress has authorized VA to prescribe 
reasonable restrictions on the amount of fees that agents or attorneys 
may charge claimants for services on VA benefits claims. 38 U.S.C. 
5904(a)(5). In addition, VA has the authority to review a fee agreement 
between an agent or attorney and a claimant and order a reduction in 
the fee if VA finds that fee is excessive or unreasonable. 38 U.S.C. 
5904(c)(3)(A). VA also has the discretion to directly pay the fee of an 
agent or attorney from a claimant's past-due benefits if the claimant 
and the agent or attorney have entered into a fee agreement that 
requests direct payment and meets statutory and regulatory criteria, 
including the requirement that the fee not exceed 20 percent of the 
past-due benefits awarded to the claimant. 38 U.S.C. 5904(d). VA may 
issue all necessary or appropriate rules and regulations to carry out 
these authorities. 38 U.S.C. 501(a).
    Based on these authorities, VA's Office of the General Counsel 
(OGC), which acts as the agency of original jurisdiction for reviewing 
fee agreements, currently performs a ``fee reasonableness'' review in 
two circumstances: (1) when the claimant or VA has questioned the 
reasonableness of the fee set forth in the agreement, and (2) when 
multiple agents or attorneys provided representation. OGC provides 
review in the latter circumstance in order to decide the amount to be 
directed to each agent or attorney for purposes of direct payment, 
since the ``total fee payable'' in direct payment cases is limited to 
20 percent of the past-due benefits awarded. Lippman v. Shinseki, 23 
Vet. App. 243, 250 (2009) (citing Scates v. Principi, 282 F.3d 1362, 
1365-66 (Fed. Cir. 2002)). This review ensures that claimants are not 
forced to part with, for example, 60 percent of their past-due benefits 
just because they were represented by three different attorneys with 
20-percent fee agreements over the course of a case. Congress intended 
to protect a claimant's benefits from improper diminution by excessive 
legal fees, and Congress authorized VA to implement fair processes and 
reasonable restrictions in these circumstances. 38 U.S.C. 5904(a)(5), 
(c)(3)(A); Scates, 282 F.3d at 1366.
    Over the past decade, however, there has been a steady increase in 
cases involving multiple agents or attorneys, as well as requests for 
OGC review. For example, in fiscal year 2020, OGC received 
approximately 150 fee reasonableness requests or referrals; in fiscal 
year 2023, OGC received almost 700. OGC has limited resources to issue 
determinations on reasonable fees in all those cases. This has led to 
increased inventory for all fee matters, which has delayed attorneys, 
agents, and claimants from promptly receiving their earned fees or 
benefits. To best ensure timely resolution of fee matters for all 
parties, VA believes it is appropriate to establish reasonable default 
allocation rules for fee matters and to focus OGC's resources on those 
cases where a party has expressed an affirmative desire for an OGC 
determination based on the unique circumstances of the particular case. 
Moreover, there are many fee matters that can be worked out between the 
parties, without OGC involvement, and VA wishes to encourage such 
resolutions. Overall, these default rules will allow attorneys, agents, 
and claimants (as further explained below) to receive their fees and 
benefits faster.
    Under current practice, after issuing a decision awarding past-due 
benefits, if a direct-pay fee agreement has been filed, the agency of 
original jurisdiction (typically the Veterans Benefits Administration) 
issues a fee notice containing a determination on agent or attorney fee 
eligibility. 38 CFR 14.636(c)(4). Under this proposed rule, the fee 
notice would provide one of two default fee allocations depending on 
the posture of the case. In cases where there is a ``continuous agent 
or attorney''--an agent or attorney who provided representation that 
continued through the date of the decision awarding benefits--who meets 
the requirements for fee eligibility and direct payment enumerated in 
other paragraphs of Sec.  14.636, the default would be allocation of 
the fee to that continuous agent or attorney. Otherwise, the default 
would be an equal split of the fee based on the number of agents or 
attorneys who meet the requirements for fee eligibility and direct 
payment plus the claimant.
    The fee notice would note that any party (i.e., the claimant or an 
agent or attorney who represented the claimant in the case) has the 
opportunity to request, within 60 days of the notice, OGC review of a 
reasonable fee allocation for the case. In other words, if any party is 
dissatisfied with the default fee allocation in a case, they would be 
free to request OGC review of reasonable fees in the case. Upon receipt 
of a timely request, OGC would initiate a review, provide an 
opportunity to respond, and issue a decision on the matter. Absent a 
timely request for OGC review (or a timely appeal to the Board of 
Veterans' Appeals regarding an agent's or attorney's fee eligibility), 
however, the fee would be released in accord with the default 
allocation in the fee notice.
    As to the reason for proposing these specific default fee 
allocations, where a continuous agent or attorney meets the 
requirements for fee eligibility and direct payment, the default of 
allocating the fee to that agent or attorney is logical because that 
agent or attorney's fee is presumed reasonable under 38 CFR 
14.636(f)(1). That agent or attorney--who was the representative of 
record

[[Page 88296]]

when the benefits were actually secured--is in a different position 
than any agents or attorneys who were discharged or withdrew prior to 
the award of benefits (hereinafter referred to as ``discharged agents 
or attorneys''), whose entitlement to a fee is not governed by a 
presumption but instead premised on their contribution to and 
responsibility for the benefits awarded. 38 CFR 14.636(f)(2); see 
Scates, 282 F.3d at 1366. Of course, if any discharged agent or 
attorney believes that he or she contributed meaningfully to the case, 
he or she can work out the matter with the continuous agent or attorney 
or (if that effort proves unsuccessful) request that OGC initiate a 
review of reasonable fees. See generally ABA Comm. On Ethics & Prof'l 
Responsibility, Formal Op. 487 (2019) (addressing fee division with 
client's prior counsel). Similarly, if the claimant believes the total 
fee to be unreasonable, he or she can work out the matter with the 
other parties or (if that effort proves unsuccessful) request an OGC 
determination on reasonable fees.
    Furthermore, where all agents or attorneys were discharged prior to 
the date of the decision awarding benefits, the default of a split of 
the fee is logical because the presumption of 38 CFR 14.636(f)(1) does 
not apply to such agents and attorneys, and all agents or attorneys are 
generally in the same position vis-[agrave]-vis the fee: they are only 
entitled to a fee based on quantum meruit, 38 CFR 14.636(f)(2); see 
Scates, 282 F.3d at 1366. That default split should include the 
claimant because, historically, when OGC has reviewed fee 
reasonableness in cases where all agents or attorneys have been 
discharged, OGC has--more often than not--found it reasonable to bestow 
the agent(s) and/or attorney(s) less than the full potential fee (and 
to return the remainder to the claimant). For example, in fiscal year 
2022, of the 126 fee reasonableness decisions issued addressing the 
situation where all agents and attorneys had been discharged, OGC 
returned some of the potential fee to the claimant in 107 of those 
decisions (84%). Overall, $2.19 million was at stake in these 126 
cases, and OGC returned $1.31 million to claimants (60% of the amount 
at stake). Similar data has emerged through the first three quarters of 
fiscal year 2023. Of the 82 fee reasonableness decisions issued 
addressing the situation where all agents and attorneys had been 
discharged, OGC returned some of the potential fee to the claimant in 
72 of those decisions (88%). Overall, $1.77 million was at stake in 
these 82 cases, and OGC returned $1.22 million to claimants (68% of the 
amount at stake).
    This data reflects the practical reality that, when a claimant 
secures a favorable decision (sometimes months, often years) after 
agent or attorney discharge, it may be the claimant (or a Veterans 
Service Organization) that bears more responsibility for the benefits 
awarded, and the former agents or attorneys that bear less. It is 
reasonable for a default--which is merely a baseline that has no effect 
once a party requests OGC review--to reflect that reality, particularly 
given the general law on quantum meruit, which suggests that a default 
should be structured in a way that places the burden on discharged 
agents or attorneys to file with OGC if they believe their 
contributions warrant the full potential fee, not on the claimant to 
file with OGC if they believe otherwise. Young v. Alden Gardens of 
Waterford, LLC, 30 NE3d 631, 656 (Ill. App. Ct. 1st Dist. 2015); Gold, 
Weems, Buser, Sues & Rundell v. Granger, 947 So.2d 835, 842 (La. App. 1 
Cir. 2006); Bass v. Rose, 609 SE2d 848, 853 (W. Va. 2004) (attorney 
bears burden of showing that fees sought are reasonable). Including the 
claimant in this default split also accounts for the possibility that 
the claimant may have entered into a non-direct pay agreement with 
other agents or attorneys and may be personally responsible for paying 
those other agents or attorneys. In any event, this type of split is 
just a default, aimed to provide a generally reasonable baseline in 
these cases; if any party believes the default split is not reasonable 
in a given case, they can work out another arrangement with the other 
parties on their own or (if that effort proves unsuccessful) request an 
OGC determination on reasonable fees.
    These changes would be incorporated into Sec.  14.636(i), the 
current paragraph addressing OGC's review of fee agreements. Proposed 
paragraph (i)(1) would address fee allocation notices and the default 
fee allocations therein. Proposed paragraph (i)(2) would address the 
release of allocated fees and finality at the expiration of the 60-day 
period for requesting OGC review. Proposed paragraph (i)(3) would 
address the process for requesting that OGC initiate a reasonableness 
review. Proposed paragraph (i)(4) would address the opportunity to 
submit argument and evidence during OGC's review. Proposed paragraph 
(i)(5) would provide the standards for OGC's decision. Proposed 
paragraph (i)(6) would note the right to appeal OGC's decision to the 
Board of Veterans' Appeals.
    To be clear, the default fee allocations of this proposed rule do 
not relieve attorneys or agents of their ethical obligation not to 
accept an unreasonable fee. See 84 FR 138, 151 (2019) (``[P]ursuant to 
VA's standards of conduct in 38 CFR 14.632, attorneys and agents are 
prohibited from charging, soliciting, or receiving fees that are 
clearly unreasonable, and, if an attorney or agent [ ] is found to have 
violated this standard of conduct, the attorney or agent would risk 
losing his or her accreditation to represent claimants before VA.''); 
Model Rules of Prof'l Conduct r. 1.5(a) (Am. Bar Ass'n 2022). In other 
words, notwithstanding the default fee allocations of this proposed 
rule, it is a violation of VA's standards of conduct for an attorney or 
agent to blindly pocket fees that were unearned. 38 CFR 14.632(c)(5); 
cf. Scates, 282 F.3d at 1366 (reasonable fee for discharged agent or 
attorney is limited to a ``fee that fairly and accurately reflects [the 
attorney or agent's] contribution to and responsibility for the 
benefits awarded''); 38 CFR 14.636(f)(2). Thus, upon receipt of a fee 
allocation notice, the agent or attorney has a professional 
responsibility to review the default fee and ensure that it is not 
clearly unreasonable; if it is, that agent or attorney has an ethical 
obligation to return that fee to the claimant. The failure to return 
the fee to the claimant in such circumstances could constitute a 
violation of VA's standards of conduct warranting suspension or 
cancellation of the agent's or attorney's accreditation to represent 
claimants before VA. See 38 CFR 14.633(c)(6).
    Related to that ethical issue, VA is proposing to update Sec.  
14.636(h) to address the effect on direct payment of the termination of 
an agent or attorney's VA accreditation. Post-termination, VA has no 
internal enforcement mechanism against these individuals for violating 
VA's standards of conduct, including the aforementioned standard that 
prohibits receipt of a fee that is clearly unreasonable; it would 
therefore complicate the ethical safeguards underpinning this proposed 
rule if agents or attorneys who have lost accreditation are included. 
Moreover, as a practical matter, it has been difficult to contact and 
directly pay agents or attorneys who have had their VA accreditation 
terminated, because they are no longer responsible for maintaining 
updated contact information with VA.
    VA has the discretion to decline direct payment in certain 
circumstances notwithstanding the submission of a direct-pay fee 
agreement. Ravin v. Wilkie, 956 F.3d 1346, 1350 (Fed. Cir.

[[Page 88297]]

2020); see 38 U.S.C. 5904(d)(3) (Secretary ``may'' directly pay a fee 
to an agent or attorney upon submission of a direct-pay fee agreement). 
For the above reasons, VA proposes to exercise its discretion and not 
directly pay agents and attorneys whose accreditation has been 
terminated. Instead, any potential fee for these former agents or 
attorneys would be released to the claimant, and the agent or attorney 
would be responsible for collecting that fee without assistance from 
VA. See 38 CFR 14.636(g)(2). This limitation on direct payment would be 
placed in paragraph (h)(1)(iii). The language of current paragraph 
(h)(1)(iii) would be relocated to paragraph (h)(1)(iv).
    Lastly, VA is proposing additional, minor revisions to Sec.  
14.636. First, VA would remove Sec.  14.636(c)(4), since the agency of 
original jurisdiction's fee eligibility notice under that paragraph 
would now be termed a fee allocation notice under proposed Sec.  
14.636(i)(1). Second, VA would revise Sec.  14.636(e) to use the term 
``agent or attorney'' in lieu of ``representative,'' because only 
agents and attorneys (not all representatives) can charge a fee. Also 
in that paragraph, VA would reiterate that fees set forth in a fee 
agreement, charged, or received for services must be reasonable, 
consistent with VA's standards of conduct discussed above, and note 
that fee reasonableness for one agent or attorney can be affected by 
the fee entitlement of another agent or attorney. Third, while filing 
fee agreements within 30 days of their execution would remain a 
regulatory requirement, Sec.  14.636(g)(3) would explicitly note VA's 
discretion to accept fee agreements filed thereafter upon a showing of 
sufficient cause. Fourth, VA would simplify Sec.  14.636(k), since the 
``modernized review system'' of the Veterans' Appeals Improvement and 
Modernization Act, Public Law 115-55 (2017), governs all decisions on 
new fee matters. Fifth, VA is proposing new or revised captions for 
paragraphs (e), (j), and (k) that more accurately convey the subject-
matter of each paragraph.

Executive Orders 12866, 13563, and 14094

    Executive Orders (E.O.) 12866 and 13563 direct agencies to assess 
the costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). E.O. 13563 (Improving Regulation and Regulatory Review) 
emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. Executive 
Order 14094 (Modernizing Regulatory Review) supplements and reaffirms 
the principles, structures, and definitions governing contemporary 
regulatory review established in Executive Orders 12866 and 13563. The 
Office of Information and Regulatory Affairs has determined that this 
rulemaking is a significant regulatory action under E.O. 12866, as 
amended by Executive Order 14094. The Regulatory Impact Analysis 
associated with this rulemaking can be found as a supporting document 
at www.regulations.gov.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed rule would not 
have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act (5 
U.S.C. 601-612). The basis for this certification is the fact that the 
proposed rule would merely institute reasonable default rules for fee 
allocation and provide that agents and attorneys who have lost their VA 
accreditation collect any earned fees without VA assistance. These 
changes would not result in any loss of fees to which an agent or 
attorney is reasonably entitled, because, as noted above, any party 
dissatisfied with the default allocation in a given case can request 
OGC's determination on reasonable fees in the case. Therefore, pursuant 
to 5 U.S.C. 605(b), the initial and final regulatory flexibility 
analysis requirements of 5 U.S.C. 603 and 604 do not apply.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This proposed rule would have no such 
effect on State, local, and tribal governments, or on the private 
sector.

Paperwork Reduction Act

    This proposed rule includes provisions associated with a collection 
of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521) 
that require approval by the Office of Management and Budget (OMB). The 
collection of information was previously approved by OMB and assigned 
the control number of 2900-0605 but expired in March 2022. Accordingly, 
under 44 U.S.C. 3507(d), VA has submitted a copy of this rulemaking 
action to OMB for review and reinstatement with change.
    OMB assigns control numbers to collection of information it 
approves. VA may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. If OMB does not approve the 
collection of information as requested, VA will immediately remove the 
provisions containing the collection of information or take such other 
action as is directed by OMB.
    Comments on the collection of information associated with this 
rulemaking should be submitted through www.regulations.gov. Comments 
should indicate that they are submitted in response to ``RIN 2900-AR93, 
Fee Reasonableness Reviews; Effect of Loss of Accreditation on Direct 
Payment'' and should be sent within 60 days of publication of this 
rulemaking. The collection of information associated with this 
rulemaking can be viewed at: www.reginfo.gov/public/do/PRAMain.
    OMB is required to make a decision concerning the collection of 
information contained in this rulemaking between 30 and 60 days after 
publication of this rulemaking in the Federal Register. Therefore, a 
comment to OMB is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment on the provisions of this 
rulemaking.
    The Department considers comments by the public on a collection of 
information in--
     Evaluating whether the collection of information is 
necessary for the proper performance of the functions of the 
Department, including whether the information will have practical 
utility;
     Evaluating the accuracy of the Department's estimate of 
the burden of the collection of information, including the validity of 
the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    The collection of information associated with this rulemaking is

[[Page 88298]]

described immediately following this paragraph, under its respective 
title.
    Title: Application for Accreditation as a Claims Agent or Attorney, 
Filing of Representatives' Fee Agreements and Motions for Review of 
Such Fee Agreements.
    OMB Control No: 2900-0605.
    CFR Provisions: 38 CFR 14.629, 14.636.
     Summary of collection of information:
    (1) Applicants seeking accreditation as claims agents or attorneys 
to represent benefits claimants before VA must file VA Form 21a with 
OGC. The information requested in VA Form 21a includes basic 
identifying information, as well as certain information concerning 
training and experience, military service, and employment. See 38 
U.S.C. 5901; 38 CFR 14.629(b).
    (2) If accredited agents and attorneys wish to maintain 
accreditation, they must file recertifications with OGC that they have 
completed Continuing Legal Education (CLE) requirements and are in good 
standing with other courts, bars, and Federal and State agencies. See 
38 U.S.C. 5904(a)(2)-(3); 38 CFR 14.629(b).
    (3) Accredited agents and attorneys must file with VA any agreement 
for the payment of fees charged for representing claimants before VA. 
38 U.S.C. 5904(c)(2); 38 CFR 14.636(g).
    (4) Claimants, accredited agents, or accredited attorneys may 
request an OGC determination on a reasonable fee allocation in a given 
case. If they do, OGC will solicit (optional) responses from the other 
parties in the case. 38 U.S.C. 5904(c)(3); 38 CFR 14.636(i).
     Description of need for information and proposed use of 
information:
    (1) The information in the VA Form 21a is used by OGC to determine 
the applicant's eligibility for accreditation as a claims agent or 
attorney. More specifically, it is used to evaluate qualifications, 
ensure against conflicts of interest, and to establish that statutory 
and regulatory eligibility requirements, e.g., good character and 
reputation, are met.
    (2) The information in recertifications is used by OGC to monitor 
whether accredited attorneys and agents continue to have appropriate 
character and reputation and whether they remain fit to prepare, 
present, and prosecute VA benefit claims.
    (3) The information in a fee agreement is used by the Veterans 
Benefits Administration (VBA) to associate the fee agreement with the 
claimant's claims file, to potentially determine the attorney or 
agent's fee eligibility, and to potentially process direct payment of a 
fee from the claimant's past-due benefits. It is used by OGC to monitor 
whether the agreement is in compliance with laws governing paid 
representation, and to potentially review fee reasonableness.
    (4) The information in a request for OGC fee review, or a response 
to such request, is used by OGC to determine the agents' or attorneys' 
contribution to and responsibility for the ultimate outcome of the 
claimant's claim, so that a determination on reasonable fees can be 
rendered.
     Description of likely respondents: Claimants, Attorneys, 
Agents.
     Estimated number of respondents:
    (1) For VA Form 21a applications, 2,280.
    (2) For recertifications, 4,860.
    (3) For fee agreements, 27,250 (750 first time filers and 26,500 
repeat filers).
    (4) For requests for OGC fee review, 305 (203 initial requests and 
102 party responses).
     Estimated frequency of responses: One time.
     Estimated average burden per response:
    (1) For VA Form 21a applications, 45 minutes.
    (2) For recertifications, 10 minutes.
    (3) For fee agreements, 11 minutes (1 hour for first time filers 
and 10 minutes for repeat filers).
    (4) For requests for OGC fee review, 2 hours (for both initial 
requests and party responses).
     Estimated total annual reporting and recordkeeping burden:
    (1) For VA Form 21a applications, 1,710 hours.
    (2) For recertifications, 810 hours.
    (3) For fee agreements, 5,167 hours (750 hours for first time 
filers and 4,417 hours for repeat filers).
    (4) For requests for OGC fee review, 610 hours (406 hours for 
initial requests and 204 hours for responses).
     Estimated cost to respondents per year:
    (1) For VA Form 21a applications, $74,767.
    (2) For recertifications, $63,779.
    (3) For fee agreements, $406,850.
    (4) For requests for OGC fee review, $43,133.
    * To estimate the total information collection burden cost, VA used 
the Bureau of Labor Statistics (BLS) average hourly wage information 
available at https://www.bls.gov/oes/current/oes_nat.htm.

List of Subjects in 38 CFR Part 14

    Administrative practice and procedure, Claims, Courts, Foreign 
relations, Government employees, Lawyers, Legal services, Organization 
and functions (Government agencies), Reporting and recordkeeping 
requirements, Surety bonds, Trusts and trustees, Veterans.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs, signed and approved 
this document on December 12, 2023, and authorized the undersigned to 
sign and submit the document to the Office of the Federal Register for 
publication electronically as an official document of the Department of 
Veterans Affairs.

Luvenia Potts,
Regulation Development Coordinator, Office of Regulation Policy & 
Management, Office of General Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs proposes to amend 38 CFR part 14 as set forth below:

PART 14--LEGAL SERVICES, GENERAL COUNSEL, AND MISCELLANEOUS CLAIMS

0
1. The authority citation for part 14 continues to read as follows:

    Authority:  5 U.S.C. 301; 28 U.S.C. 2671-2680; 38 U.S.C. 501(a), 
512, 515, 5502, 5901-5905; 28 CFR part 14, appendix to part 14, 
unless otherwise noted.

0
2. Amend Sec.  14.636 by:
0
a. Removing paragraph (c)(4);
0
b. Revising paragraphs (e), (g)(3), and (h)(1)(ii);
0
c. Redesignating paragraph (h)(1)(iii) as paragraph (h)(1)(iv);
0
d. Adding new paragraph (h)(1)(iii); and
0
d. Revising paragraphs (i) through (k).
    The revisions read as follows:

Sec.  14.636   Payment of fees for representation by agents and 
attorneys in proceedings before Agencies of Original Jurisdiction and 
before the Board of Veterans' Appeals.

* * * * *
    (e) Fee reasonableness factors. Fees set forth in a fee agreement, 
charged, or received for the services of an agent or attorney admitted 
to practice before VA must be reasonable. They may be based on a fixed 
fee, hourly rate, a percentage of benefits recovered, or a combination 
of such bases. Factors considered in determining whether fees are 
reasonable include:
    (1) The extent and type of services the agent or attorney 
performed;
    (2) The complexity of the case;
    (3) The level of skill and competence required of the agent or 
attorney in giving the services;
    (4) The amount of time the agent or attorney spent on the case;

[[Page 88299]]

    (5) The results the agent or attorney achieved, including the 
amount of any benefits recovered;
    (6) The level of review to which the claim was taken and the level 
of the review at which the agent or attorney was retained;
    (7) Rates charged by other agents or attorneys for similar 
services;
    (8) Whether, and to what extent, the payment of fees is contingent 
upon the results achieved;
    (9) If applicable, the reasons why an agent or attorney was 
discharged or withdrew from representation before the date of the 
decision awarding benefits; and
    (10) If applicable, the fee entitlement of another agent or 
attorney in the case.
* * * * *
    (g) * * *
    (3) A copy of a direct-pay fee agreement, as defined in paragraph 
(g)(2) of this section, must be filed with the agency of original 
jurisdiction within 30 days of its execution. A copy of any fee 
agreement that is not a direct-pay fee agreement must be filed with the 
Office of the General Counsel within 30 days of its execution by 
mailing the copy to the following address: Office of the General 
Counsel (022D), Department of Veterans Affairs, 810 Vermont Avenue NW, 
Washington, DC 20420. Only fee agreements that do not provide for the 
direct payment of fees, documents related to review of fees under 
paragraph (i) of this section, and documents related to review of 
expenses under Sec.  14.637, may be filed with the Office of the 
General Counsel. All documents relating to the adjudication of a claim 
for VA benefits, including any correspondence, evidence, or argument, 
must be filed with the agency of original jurisdiction, Board of 
Veterans' Appeals, or other VA office as appropriate. VA may accept fee 
agreements that were not filed within 30 days of execution upon a 
showing of sufficient cause.
    (h) * * *
    (1) * * *
    (ii) The amount of the fee is contingent on whether or not the 
claim is resolved in a manner favorable to the claimant or appellant,
    (iii) The agent or attorney is accredited (see Sec. Sec.  14.627(a) 
and 14.629(b)) on the date of VA's fee allocation notice (see paragraph 
(i) of this section), and
    (iv) The award of past-due benefits results in a cash payment to a 
claimant or an appellant from which the fee may be deducted. (An award 
of past-due benefits will not always result in a cash payment to a 
claimant or an appellant. For example, no cash payment will be made to 
military retirees unless there is a corresponding waiver of retirement 
pay. (See 38 U.S.C. 5304(a) and 38 CFR 3.750))
* * * * *
    (i) Fee review. For purposes of this paragraph (i), ``party'' means 
the claimant or appellant or any agent or attorney who represented the 
claimant or appellant in the case; ``eligible for direct payment'' 
means eligible for direct payment of a fee under the requirements of 
paragraphs (c), (g), and (h) of this section; ``continuous agent or 
attorney'' means the agent or attorney who provided representation that 
continued through the date of the decision awarding benefits; and 
``timely filed'' means within 60 days of the fee allocation notice.
    (1) When one or more direct-pay fee agreements has been filed in 
accordance with paragraph (g) of this section and a decision awards 
past-due benefits in a case, the agency of original jurisdiction that 
issued the decision shall issue to the parties a fee allocation notice. 
The fee allocation notice shall decide whether the agents or attorneys 
who filed direct-pay fee agreements in the case are eligible for direct 
payment, and shall provide one of two default fee allocations:
    (i) In cases where a continuous agent or attorney is eligible for 
direct payment, the default shall be allocation of the fee to the 
continuous agent or attorney.
    (ii) In cases where paragraph (i)(1)(i) of this section does not 
apply, the default shall be an equal split of the fee based on the 
number of agents or attorneys who are eligible for direct payment plus 
the claimant or appellant.
    (2) A party that disagrees with the default fee allocation in a 
given case may file a request for Office of the General Counsel fee 
review, as provided in paragraph (i)(3) of this section. A party that 
disagrees with a direct payment eligibility determination may only 
appeal to the Board of Veterans' Appeals. Absent a timely filed request 
for Office of the General Counsel fee review or a timely filed appeal 
to the Board of Veterans' Appeals, the default fee allocation described 
in paragraphs (i)(1)(i) and (ii) of this section is final and VA may 
release the fee.
    (3) A request for Office of the General Counsel fee review under 
this paragraph (i) must be filed electronically in accordance with the 
instructions on the Office of the General Counsel's website, or at the 
following address: Office of the General Counsel (022D), 810 Vermont 
Avenue NW, Washington, DC 20420. The request must include the names of 
the veteran and all parties, the applicable VA file number, and the 
date of the decision awarding benefits. The request must set forth the 
requestor's proposal as to reasonable fee allocation, and the reasons 
therefor, and must be accompanied by all argument and evidence the 
requestor desires to submit.
    (4) Upon the receipt of a timely filed request under paragraph 
(i)(3) of this section, or upon his or her own initiative, the Deputy 
Chief Counsel with subject-matter jurisdiction will initiate the Office 
of the General Counsel's motion for a fee review by sending notice to 
the parties. Not later than 30 days from the date of the motion, any 
party may file a response, with all argument and evidence the party 
desires to submit, electronically in accordance with the instructions 
on the Office of the General Counsel's website, or at the following 
address: Office of the General Counsel (022D), 810 Vermont Avenue NW, 
Washington, DC 20420. Such responses must be served on all other 
parties. The Deputy Chief Counsel with subject-matter jurisdiction may, 
for a reasonable period upon a showing of sufficient cause, extend the 
time for any party's response.
    (5) The General Counsel or his or her designee shall render the 
Office of the General Counsel's decision on the matter. The decision 
will be premised on the reasonableness factors of paragraph (e) of this 
section, the standards of paragraph (f) of this section, the limitation 
on direct payment of paragraph (h)(1)(i) of this section, the claims 
file, the parties' submissions, and all relevant factors. The decision 
may address the issue of fee eligibility if no other agency of original 
jurisdiction has made a determination on that issue.
    (6) The Office of the General Counsel's decision is a final 
adjudicative action that may only be appealed to the Board of Veterans' 
Appeals. Unless a party files a Notice of Disagreement with the Office 
of the General Counsel's decision, the parties must allocate any excess 
payment in accordance with the decision not later than the expiration 
of the time within which the Office of the General Counsel's decision 
may be appealed to the Board of Veterans' Appeals.
    (j) Failure to comply. In addition to whatever other penalties may 
be prescribed by law or regulation, failure to comply with the 
requirements of this section may result in proceedings under Sec.  
14.633 to terminate the agent's or attorney's accreditation to practice 
before VA.

[[Page 88300]]

    (k) Appeals. Except as otherwise provided in this section, appeals 
shall be initiated and processed using the procedures in 38 CFR part 20 
applicable to appeals under the modernized system.

[FR Doc. 2023-28100 Filed 12-20-23; 8:45 am]
BILLING CODE 8320-01-P
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