Citation Nr: 1720101	
Decision Date: 06/06/17    Archive Date: 06/21/17

DOCKET NO.  16-35 676	)	DATE
	)
	)

On appeal from the
Department of Veterans Affairs Regional Office in Buffalo, New York


THE ISSUE

Whether an overpayment of Department of Veterans Affairs compensation benefits in the amount of $2,655.00 for the recoupment of attorney fees from past-due benefits granted in an October 2015 rating decision was properly created.

(A separate decision will be issued under a separate docket number with respect to the issues of entitlement to service connection for an acquired psychiatric disorder, to include dysthymic disorder, and as secondary to service-connected chronic lumbar strain; entitlement to a higher evaluation for chronic lumbar strain; and entitlement to a total disability evaluation based on individual unemployability due to service-connected disabilities.)


REPRESENTATION

Veteran represented by:	The American Legion


ATTORNEY FOR THE BOARD

Journet Shaw, Associate Counsel


INTRODUCTION

The Veteran served on active duty in the U.S. Army from August 2001 to March 2005.  Among other awards, the Veteran received the Army Service Ribbon and National Defense Service Medal.

This matter comes before the Board of Veterans' Appeals (Board) on appeal from a March 2016 administrative decision by the Department of Veterans Affairs (VA) Regional Office (RO) in Buffalo, New York.  

The issue of entitlement to a waiver of overpayment was claimed by the Veteran in April 2016, and denied in a subsequent September 2016 Decision on Waiver of Indebtedness.  To date, the Veteran has not filed an appeal; therefore, the issue of waiver of overpayment is not before the Board.  However, the one-year time period for filing a Notice of Disagreement with the September 2016 decision has not yet expired; thus, to the extent the Veteran wishes to appeal the September 2016 denial for a waiver, the Veteran should submit a NOD to that decision before the decision becomes final.  

The Veteran was previously represented by John R. Worman, attorney.  The record shows that in January 2015 the Veteran executed a VA Form 21-22 in favor of The American Legion.  The Board recognizes this change in representation.



FINDINGS OF FACT

1.  In April 2012, the Veteran and her attorney entered into a valid fee agreement.  

2.  In April 2012, the Veteran's attorney filed a Notice of Disagreement to the March 2012 rating decision disagreeing with the denial for service connection for dysthymic disorder and the denial for a higher evaluation for chronic lumbar strain. 

2.  In October 2015, the RO issued a rating decision granting service connection for radiculopathy of the left lower extremity; granting service connection for radiculopathy of the right lower extremity; and granting a 40 percent evaluation for service-connected chronic lumbar strain.  

3.  In March 2016, the RO issued an administrative decision establishing an overpayment in the amount of $2,655.00 for the recoupment of attorney fees from past-due benefits awarded in the October 2015 rating decision.  

4.  The attorney is entitled to attorney fees in the amount of $2,655.00.  

5.  The overpayment of VA compensation benefits to recoup attorney fees in the amount of 2,655.00 was properly created.  


CONCLUSION OF LAW

The overpayment of VA compensation benefits to recoup attorney fees in the amount of $2,655.00 from past-due benefits granted in an October 2015 rating decision was properly created.  38 U.S.C.A. §§ 5302, 5904 (West 2014); 38 C.F.R. §§ 1.956, 1.962, 14.636 (2016).



REASONS AND BASES FOR FINDINGS AND CONCLUSION

The Veterans Claims Assistance Act of 2000 (VCAA) sets forth VA's duties to notify and assist claimants in substantiating claims for VA benefits.  See 38 U.S.C.A §§ 5100, 5102, 5103, 5103A, 5107 (West 2014); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2016).  The VCAA does not apply to cases involving the validity of a debt, which are not claims for benefits.  See Reyes v. Nicholson, 21 Vet. App. 370, 379-80 (2007); Lueras v. Principi, 18 Vet. App. 435, 438 (2004); Barger v. Principi, 15 Vet. App. 132 (2002).  Thus, the provisions of the VCAA do not apply in this matter.

An overpayment is created when VA determines that a beneficiary or payee has received benefit payments in excess of the amount due or to which such beneficiary or payee is entitled.  38 C.F.R. § 1.962 (2016).  The debtor may challenge the validity or amount of the debt owed.  See 38 C.F.R. § 1.911(c)(1) (2016); see also VAOPGCPREC 6-98; Schaper v. Derwinski, 1 Vet. App. 430, 437 (1991).  The debtor may also apply for a waiver of any debt found to be valid.  See 38 U.S.C.A. § 5302 (West 2014); 38 C.F.R. §§ 1.911(c)(2), 1.963 (2016).  As discussed above, only the validity of the debt is at issue in this appeal.  

A VA claimant and an attorney may enter into a fee agreement providing that payment for the services of the attorney will be made directly to the attorney by VA out of any past-due benefits awarded in a proceeding before VA or an appellate court.  38 U.S.C.A. § 5904(d) (2016).

Regarding circumstances in which attorney fees may be charged, attorneys may charge claimants and appellants for representation before VA provided that: after an agency of original jurisdiction has issued a decision on a claim or claims, including any claim to reopen under 38 C.F.R. § 3.156 or for an increase in rate of a benefit; a notice of disagreement has been filed with respect to that decision on or after June 20, 2007; and the attorney has complied with the power of attorney requirements in 38 C.F.R. § 14.631 and the fee agreement requirements in 38 C.F.R. § 14.636 (g).  See 38 C.F.R. § 14.636(c)(1) (2016).

The total fee payable to any attorney under such a fee agreement "may not exceed 20 percent of the total amount of any past-due benefits awarded on the basis of the claim."  38 U.S.C.A. § 5904(d)(1).  The statute also precludes an attorney from claiming as a fee a portion of the future monthly benefits that will be paid to the Veteran.  The statute further provides that a fee pursuant to a statutory fee agreement is to be paid to the attorney by VA directly from any past-due benefits awarded on the basis of the claim.  38 U.S.C. § 5904(d)(2)(A)(i).  Under VA regulations, such award of past-due benefits must result 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.)  38 C.F.R. § 14.636(h)(1)(iii).

In April 2012, the Veteran and the attorney in this case entered into a valid fee agreement pertaining to all proceedings for benefits before VA.  The agreement states that the Veteran agrees to pay a fee equal to 20 percent of the total amount of any past due benefits awarded on the basis of the Veteran's claim with VA.  The agreement also indicates that "this contingent fee is to be paid by the VA directly to the Attorney from any past due benefits awards on the basis of the Client's claim."   Furthermore, the agreement reflects that "Client remains liable for the amount of the contingent fee of 20 percent of any past due benefits awarded on the basis of the Client's claim until and unless the fee is paid to the Attorney by the VA."  

In response to a March 2012 rating decision, the Veteran's attorney, on behalf of the Veteran, filed a Notice of Disagreement (NOD) in April 2012 to the March 2012 rating decision.  The April 2012 NOD disagreed with the March 2012 decision denying service connection for dysthymic disorder and denying a higher evaluation for chronic lumbar strain.  

In an October 2015 rating decision, the RO granted service connection for radiculopathy of the left lower extremity (LLE) and assigned a 10 percent evaluation, effective March 19, 2014; granted service connection for radiculopathy of the right lower extremity (RLE) and assigned a 10 percent evaluation, effective March 19, 2014; and granted a 40 percent evaluation for chronic lumbar strain, effective March 19, 2014.  

In a December 2015 correspondence, the attorney in this case indicated that he was no longer representing the Veteran in her VA benefits claim, and had notified her to that effect.  The attorney also stated that he was not waiving his right to collect any attorney fees that he might be entitled to.  

In a March 2016 administrative decision, the RO explained that it had mistakenly overlooked the filing of the direct-pay fee agreement and did not withhold any amount from the Veteran's past-due benefits for attorney fees from the October 2015 award.  The RO noted that attorney fees in the amount of $2,655.00 should have been withheld.  As a result, the RO found that an overpayment had been created in that amount and proposed recouping that amount from the Veteran's benefit payments.  In May 2016, the Veteran filed a NOD disagreeing with that decision, but not offering any specific argument.  In a June 2016 statement of the case, the RO found that the attorney fees in the amount of $2,655.00 was correct, and that the attorney was eligible for direct payment of fees by VA of $2,655.00.  In June 2016, the Veteran filed a VA Form 9 (Substantive Appeal) and asserted that her income was limited and that payment would cause family hardship.  As stated above, the issue of entitlement to waiver of overpayment is not at issue in this appeal.  Therefore, the Board will only address whether the overpayment in the amount of $2,655.00 was properly created.  

Whether an overpayment was properly created for which the Veteran is liable depends first on whether the attorney was entitled to the fees in question.  

A review of the evidence shows that the attorney in this case filed a NOD in April 2012 on behalf of the Veteran disagreeing with the March 2012 rating decision denying service connection for dysthymic disorder and denying a higher evaluation for chronic lumbar strain.  During the pendency of the appeal, the RO issued an October 2015 rating decision granting service connection for radiculopathy of the LLE and RLE and a higher evaluation for chronic lumbar strain.  The RO did not find that the fee agreement between the Veteran and her attorney did not comply with the law under 38 U.S.C.A. § 5904 and 38 C.F.R. § 14.636.  See March 2016 decision.  Therefore, since the NOD, filed in April 2012, was valid, the attorney did perform legal services on behalf of the Veteran, and the Veteran received past-due benefits based on such legal representation, the Board finds that the requirements of 38 C.F.R. § 14.636 have been met, and the attorney is entitled to attorney fees in the amount of $2,655.00 for past-due benefits granted in an October 2015 rating decision.  

Next, the Board finds that the overpayment in the amount $2,655.00 was properly created.  The RO admitted its failure in not withholding attorney fees from the Veteran's past-due benefits granted from an October 2015 rating decision.  In that regard, the Board notes that in finding that the attorney was entitled to the payment of attorney fees in the amount $2,655.00, and that VA had failed to withhold such fees from the grant of past-due benefits to the Veteran, the creation of the overpayment in the amount of $2,655.00 was proper.  

In sum, because the attorney is entitled to the benefits subject to the instant overpayment, the instant overpayment was properly created.  



ORDER

The overpayment of $2,655.00 created as a result of recoupment of attorney fees from past-due benefits granted in an October 2015 rating decision was properly created, and the appeal is denied.  



____________________________________________
LESLEY A. REIN
Veterans Law Judge, Board of Veterans' Appeals



Department of Veterans Affairs