Citation Nr: 1756487 Decision Date: 12/07/17 Archive Date: 12/15/17 DOCKET NO. 14-00 624 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Houston, Texas ISSUE Whether the payment of attorney's fees from past due benefits at the 20 percent rate in the calculated amount of $33,757.60 is reasonable. REPRESENTATION Veteran represented by: Texas Veterans Commission Appellant represented by: Kenneth C. Carpenter, Attorney at Law WITNESSES AT HEARING ON APPEAL The Veteran and Spouse ATTORNEY FOR THE BOARD T. Matta, Counsel INTRODUCTION The appellant is a Veteran who served on active duty from July 1973 to July 1976. This matter is before the Board of Veterans' Appeals (Board) on appeal from a July 2013 administrative decision by the Houston, Texas Department of Veterans Affairs (VA) Regional Office (RO). In May 2016, the Veteran and his wife testified at a videoconference hearing held before the undersigned; a transcript is in the record. The appellant, the Veteran's former attorney (hereinafter referred to as Appellant Attorney), was not provided notice of this hearing and therefore did not attend. A second hearing was scheduled at his request; however, in July 2017 correspondence, the Appellant Attorney withdrew his request for a hearing. Following the issuance of the October 2013 statement of the case (SOC), the Veteran submitted additional evidence. Such evidence is presumed to be submitted with a waiver of agency of original jurisdiction (AOJ) consideration as the appeal was perfected after February 2, 2013, and the Veteran did not request AOJ initial review. See Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012, Pub. L. No. 112-154, 126 Stat. 1165 (amending 38 U.S.C. § 7015(e)(1)). To the extent that this claim is favorable to the Appellant Attorney, there is no prejudice to the Appellant Attorney in so proceeding. FINDINGS OF FACT 1. A January 2010 Board decision denied service connection for posttraumatic stress disorder (PTSD). 2. Subsequently, the Veteran hired a private attorney, R.V.C., per an October 2010 fee agreement between the Veteran and the Appellant Attorney. This agreement specified a fee equal to 20 percent of the total of any past due benefits awarded based upon the Veteran's pending claim, less any Equal Access to Justice Act (EAJA) fees. A VA 21-22a was also filed at that time. 3. The Veteran, through the Appellant Attorney, appealed to the United States Court of Appeals for Veterans Claims (Court). In October 2010, the Court granted the parties' Joint Motion for Remand. 4. In an April 2011 decision, the Board granted service connection for PTSD based, in part, on a January 2011 private examination obtained by the Appellant Attorney. An April 2011 rating decision assigned a 70 percent disability rating, effective March 31, 2004. 5. The Appellant Attorney filed a notice of disagreement (NOD), contesting the disability rating assigned and requesting entitlement to a total disability rating based on individual unemployability (TDIU). The Appellant Attorney also filed a dependency claim on the Veteran's behalf. 6. In December 2012, the Veteran terminated the Appellant Attorney's representation by submitting a VA Form 21-22 appointing Texas Veterans Commission (TVC) as his representative. Unaware of this, the Appellant Attorney continued to work on the Veteran's claims until March 2013. 7. A July 2013 rating decision increased the Veteran's PTSD rating to 100 percent, effective March 31, 2004. 8. The fee agreement is reasonable. CONCLUSION OF LAW The requirements for payment of attorney fees in the amount of 20 percent of past-due benefits payable to the Veteran calculated in the amount of $33,757.60, have been met. 38 U.S.C § 5904 (2012); 38 C.F.R. § 14.636 (2017). REASONS AND BASES FOR FINDINGS AND CONCLUSION A. Duties to Notify and Assist As provided for by the Veterans Claims Assistance Act of 2000 (VCAA), VA has a duty to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C. §§ 5100, 5102, 5103, 5103A, 5107, 5126 (2012); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2017). However, an attorney fee dispute is not a "claim" for disability compensation benefits. The Court has held that VA's duties to notify and assist do not apply to cases where, as here, the applicant is not seeking benefits under Chapter 51 of Title 38 of the United States Code, but rather is seeking a decision regarding how benefits will be distributed under another chapter, i.e., Chapter 59. See Sims v. Nicholson, 19 Vet. App. 453, 456 (2006). Special procedural regulations are applicable to such claims. All interested parties are to be specifically notified of the action taken by the AOJ in a simultaneously contested claim, and of the right and time limit for initiating an appeal, as well as both hearing and representation rights. 38 C.F.R. § 19.100. In this matter, the Board notes that the Appellant Attorney was not initially provided any notice and did not receive copies of the NOD, SOC, or VA Form 9 substantive appeal. However, he was provided with these documents following his requests for such under the Freedom of Information Act (FOIA). Accordingly, the Board finds that no further action is necessary here under VA's duties to notify and assist. B. Factual Background The Veteran filed his initial claim of service connection for PTSD in March 2004. It was denied in a January 2005 rating decision and the Veteran perfect his appeal in this matter. A January 2010 Board decision denied service connection for PTSD and the Veteran appealed to the Court. In October 2010, he appointed Appellant Attorney to represent him. A valid fee agreement is in the record. In October 2010, the Court granted the parties' Joint Motion for Remand. In April 2011, the Board granted service connection for PTSD. An April 2011 rating decision assigned a 70 percent disability rating, effective March 31, 2004. The Veteran was advised, and did not contest, that $17, 402.37 was withheld as a fee for the Appellant Attorney. In July 2011, the Appellant Attorney submitted an NOD on the Veteran's behalf, and included a TDIU claim. In August and September 2011, the Appellant Attorney submitted a dependency claim and a TDIU application on the Veteran's behalf. He continued to request status updates regarding the dependency claim through July 2012. In December 2012, the Veteran submitted a VA Form 21-22 appointing TVC as his representative; however, the Appellant Attorney was not notified that his representation had been terminated and he continued to seek action on the Veteran's dependency claim until March 2013. At that time, the Appellant Attorney, recognizing that his VA Form 21-22a was no longer valid, submitted another VA Form 21-22a to the Veteran to be reappointed as his attorney. Following failure to receive a completed form, the Appellant Attorney advised VA in May 2013 correspondence that he no longer represented the Veteran; he stated that the fee agreement in the case was still valid and that he was entitled to 20 percent of any retroactive payment award. That same month, the Veteran was scheduled for a VA examination. Thereafter, a July 2013 rating decision increased the PTSD disability rating to 100 percent for the entire appeal period, established dependency, and considered TDIU moot. Later that month, the Veteran was advised that $33,857.60 was being withheld as 20 percent of past-due benefits for the Appellant Attorney. In July 2013, the Veteran filed an NOD with that determination, arguing that he released the Appellant Attorney and that he was therefore not entitled to any additional amounts due (save for 20 percent of the dependency amount the Veteran also received). In May 2016, the Veteran testified that the Appellant Attorney did not do any work that caused the AOJ to assign a rating of 100 percent for PTSD and that he "dropped the attorney" from representing him prior to the issuance of the July 2013 rating decision. The Veteran further testified that, after the initial grant of service connection for PTSD, the Appellant Attorney contacted him and said, "we're done with you...be happy we got you 70 percent." The Veteran claims that his current representative, TVC, actually got him the 100 percent PTSD rating. C. Legal Criteria A "simultaneously contested claim" refers to the situation in which the allowance of one claim results in the disallowance of another claim involving the same benefit, or the allowance of one claim results in the payment of a lesser benefit to another claimant. 38 C.F.R. § 20.3(p). As the propriety of attorney fees from the award of past-due benefits impacts the amount due to the Veteran, this matter qualifies as a simultaneously contested claim. Under VA law, agents and attorneys may charge claimants or appellants for representation provided that the AOJ has issued a decision on a claim(s), an NOD with respect to that decision has been filed on or after June 20, 2007, and the agent or attorney has complied with the power of attorney requirements set forth in 38 C.F.R. § 14.631 and the fee agreement requirements in 38 C.F.R. § 14.636(g). 38 U.S.C. § 5904(a)(5); 38 C.F.R. § 14.636(b). When an attorney representation contract is terminated but the attorney claims entitlement to a portion of the past-due benefits awarded, the RO must evaluate whether he or she is "eligible" to collect the fee, and then, upon objection of either party or on the Board's own initiative, the Board may review the fee for reasonableness. Lippman v. Nicholson, 21 Vet. App. 184, 190 (2007). In this respect, the Federal Circuit has observed that the line between entitlement to attorney fees and the reasonableness of such fees is not always clear. Scates v. Principi, 282 F.3d 1362, 1367 (Fed. Cir. 2002). In this case, however, there is no issue as to whether the Appellant Attorney was eligible to charge a fee for the services provided. The AOJ issued a decision on the service connection claim for PTSD, and the Appellant Attorney filed an NOD after June 20, 2007, initiating an appeal of that decision. The power of attorney and fee agreement requirements set forth in 38 C.F.R. § 14.636 were also satisfied, including those pertaining to the collection of a fee out of past-due benefits awarded to the Veteran as specified in 38 C.F.R. § 14.636(g). As the RO determined that the Appellant Attorney was entitled to the fee, and the Veteran has objected to the fee, the Board finds the question at issue is the reasonableness of the 20 percent fee in light of the work performed. VA law generally provides that fees which do not exceed 20 percent of any past-due benefits awarded shall be presumed to be reasonable. 38 U.S.C. § 5904(a)(5); 38 C.F.R. § 14.636(f). However, the Federal Circuit has held that an attorney discharged before completion of the case is entitled only to a fee reflecting his or her contribution to the litigation. Scates, 282 F.3d at 1366; cf. 38 U.S.C. § 5904(c)(3)(A) (providing that the Secretary of VA may order a reduction in the fee called for in the fee agreement if the Secretary finds that the fee is excessive or unreasonable). Thus, "an attorney with a contingent fee contract for payment of twenty percent of accrued veterans benefits awarded, discharged by the client before the case is completed, is not automatically entitled to the full twenty percent fee." Id. Rather, the attorney "may only receive a fee that fairly and accurately reflects his contribution to and responsibility for the benefits awarded." Id. In this case, the Board notes that the Appellant Attorney has not asserted that he would accept a lesser amount than the 20 percent fee. In determining whether fees are reasonable, the Board must consider the factors set forth in 38 C.F.R. § 14.636(e) and in Scates, 282 F.3d at 1368-69. See Lippman, 23 Vet. App. 256 (VA obligated to review the fee agreement and reduce the fee to be paid if it was excessive or unreasonable). Under 38 C.F.R. § 14.636(e), the factors considered in determining whether fees are reasonable include: (1) the extent and type of services the representative performed; (2) the complexity of the case; (3) the level of skill and competence required of the representative in giving the services; (4) the amount of time spent on the case; (5) the results the representative 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 representative was retained; (7) rates charged by other representatives for similar services; and (8) whether, and to what extent, the payment of fees is contingent upon the results achieved. The presumption that 20 percent of past-due benefits represents a reasonable fee may be rebutted through an examination of the above factors that establishes there is clear and convincing evidence that a fee within the 20 percent range of any past-due benefits awarded is not reasonable. 38 C.F.R. § 14.636(f). Furthermore, the Scates factors include the reasons for terminating the attorney's representation before the case was completed, the proportion of the total days spent on the case, the number of hours spent on the case compared to the hours expended by other representatives, whether entitlement to a fee may be established on the theory of quantum meruit, whether the attorney can seek recovery from the Veteran in another forum, such as a state court, and whether other representatives are seeking legal fees. Scates, 282 F.3d at 1368-69. The Board acknowledges that the Veteran has a right to discharge his attorney; however, the termination of representation does not terminate the attorney's right under a valid contract, that is, a fee agreement, to collect fees for work performed prior to termination that resulted in the claim being resolved in a manner favorable to the Veteran if all or any part of the relief sought is granted. 38 U.S.C. § 5904(d)(2). The Veteran effectively discharged the Appellant Attorney in December 2012 by submitting a VA Form 21-22 appointing TVC as his representative. The Appellant Attorney, unaware of this change in representation, continued to pursue the Veteran's claims until May 2013. The Veteran testified during his May 2016 hearing that Appellant Attorney contacted him and said, "we're done with you...be happy we got you 70 percent." Contrary to this assertion, however, the Appellant Attorney filed an NOD three months after the initial award of service connection, contesting the disability rating and requesting TDIU. Based on that NOD, the RO arranged for a VA examination in June 2013 (six months following the appointment of TVC and one month following the Appellant Attorney's realization that his representation had been revoked). Based on this examination, and the private examination obtained by the Appellant Attorney in January 2011, the RO increased the rating for PTSD from 70 percent to 100 percent for the entire appeal period. The Board finds it significant that the Veteran would not have received the increased evaluation for the entire appeal period if not for the actions of the Appellant Attorney in filing a timely NOD, especially considering that TVC was not appointed until December 2012 (more than one year following the April 2011 rating decision granting a 70 percent rating). Thus, while TVC was the Veteran's actual representative when the July 2013 rating decision was issued (which increased the rating to 100 percent for the entire appeal period), the Appellant Attorney's actions in filing the NOD allowed the RO to grant the increased rating to the date of the Veteran's original claim. Therefore, the value of the Appellant Attorney's services to the ultimate outcome of the case was significant in this regard. In determining reasonable attorney fees under the circumstances of this case, the standard is quantum meruit or "as much as deserved," as noted above. The Board has considered the factors outlined in Scates, as well as the contentions advanced by the Veteran both in writing and at his personal hearing. In light of the above, the Board concludes that the payment of 20 percent from past-due benefits arising out of the award of service connection for PTSD evaluated as 100 percent disabling, effective March 31, 2004, is warranted. The Board recognizes that this award constitutes a substantial sum due the Appellant Attorney, but concludes such a payment is not unreasonable or excessive within the broader scope of contingency fee-based legal representative of veterans. The Veteran willingly entered into a fee agreement in 2010 for such a payment and did not terminate said agreement until shortly before benefits were awarded. Thus, the relief from payment of Appellant Attorney's fees of $33,757.60, as sought by the Veteran, is denied. ORDER Relief from payment of Appellant Attorney's for past due benefits at the 20 percent rate, in the calculated amount of $33,757.60, resulting from the award of service connection for PTSD, is denied. ____________________________________________ VICTORIA MOSHIASHWILI Veterans Law Judge, Board of Veterans' Appeals