Understanding the Charging of Fees for Assistance with Veterans Claims


Legally Charging Fees When Assisting with a Veterans Claim

Assistance with a claim for veterans benefits is defined in Title 38 CFR §14.627 as the accreditation authority granted by VA to representatives, agents, and attorneys to assist "claimants" in the preparation, presentation, and prosecution of claims for VA benefits. Preparation and presentation of claims not only applies to assisting with paperwork but also includes providing specific advice to a "claimant" for his or her particular claim. VA defines a "claimant" as . . . "a person who has filed or has expressed to a (accredited) representative, (accredited) agent, or (accredited) attorney an intention to file a written application for determination of entitlement to benefits provided under title 38, United States Code, and implementing directives."

These definitions are important when considering the legal options for charging fees to individuals who might be eligible for veterans disability benefits but who have not yet received an initial "Notice of Decision." Under new rules effective February, 2019 a Notice of Decision is the usual but not necessarily first opportunity at which fees may be charged according to the new rules. There are exceptions in the rules. In addition, if someone is not considered a "claimant," fees can be charged prior to submitting a claim. But there are also other ways to generate income from providing general education or specific development services with applications for VA disability benefits and avoiding specific advice.

Charging Fees after an Initial Notice of Decision

38 CFR § 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.

(c) Circumstances under which fees may be charged.
Except as noted in paragraph (d) (see this exception discussed further below) of this section, agents and attorneys may only charge fees as follows:

(1) (i) Agents and attorneys may charge claimants or appellants for representation provided after an agency of original jurisdiction has issued notice of an initial decision on the claim or claims, including any claim for an increase in rate of a benefit, if the notice of the initial decision was issued on or after the effective date of the modernized review system as provided in § 19.2(a) of this chapter, and the agent or attorney has complied with the power of attorney requirements in § 14.631 and the fee agreement requirements in paragraph (g) of this section. For purposes of this paragraph (c)(1)(i), a decision by an agency of original jurisdiction adjudicating a supplemental claim will be considered the initial decision on a claim unless that decision was made while the claimant continuously pursued the claim by filing any of the following, either alone or in succession: A request for higher-level review, on or before one year after the date on which the agency of original jurisdiction issued a decision; a supplemental claim, on or before one year after the date on which the agency of original jurisdiction issued a decision; a Notice of Disagreement, on or before one year after the date on which the agency of original jurisdiction issued a decision; a supplemental claim, on or before one year after the date on which the Board of Veterans' Appeals issued a decision; or a supplemental claim, on or before one year after the date on which the Court of Appeals for Veterans Claims issued a decision.

(ii) Agents and attorneys may charge fees for representation provided with respect to a request for revision of a decision of an agency of original jurisdiction under 38 U.S.C. 5109A or the Board of Veterans' Appeals under 38 U.S.C. 7111 based on clear and unmistakable error if notice of the decision on a claim or claims was issued on or after the effective date of the modernized review system as provided in § 19.2(a), and the agent or attorney has complied with the power of attorney requirements in § 14.631 and the fee agreement requirements in paragraph (g) of this section.

Here is a summary of fees that can legally be charged by accredited agents or accredited attorneys, including the excerpt above.


Elements of the Fee Agreement

38 CFR § 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.

(g) Fee agreements. All agreements for the payment of fees for services of agents and attorneys (including agreements involving fees or salary paid by an organization, governmental entity or other disinterested third party) must be in writing and signed by both the claimant or appellant and the agent or attorney.

(1) To be valid, a fee agreement must include the following:

(i) The name of the veteran,

(ii) The name of the claimant or appellant if other than the veteran,

(iii) The name of any disinterested third-party payer (see paragraph (d)(2) of this section) and the relationship between the third-party payer and the veteran, claimant, or appellant,

(iv) The applicable VA file number, and

(v) The specific terms under which the amount to be paid for the services of the attorney or agent will be determined.

(The agreement must clearly specify that VA is to pay the accredited representative the amount specified out of past-due benefits unless that fee exceeds 20%, otherwise no payment will be made)

(2) Fee agreements must also clearly specify if VA is to pay the agent or attorney directly out of past due benefits. A direct-pay fee agreement is a fee agreement between the claimant or appellant and an agent or attorney providing for payment of fees out of past-due benefits awarded directly to an agent or attorney. A fee agreement that does not clearly specify that VA is to pay the agent or attorney out of past-due benefits or that specifies a fee greater than 20 percent of past-due benefits awarded by VA shall be considered to be an agreement in which the agent or attorney is responsible for collecting any fees for representation from the claimant without assistance from VA.

(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 § 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.

The Third-Party Exception under38 CFR § 14.636 (d)

38 CFR § 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

(d) Exceptions.

(2) Payment of fee by disinterested third party.

(i) An agent or attorney may receive a fee or salary from an organization, governmental entity, or other disinterested third party for representation of a claimant or appellant even though the conditions set forth in paragraph (c) of this section have not been met. An organization, governmental entity, or other third party is considered disinterested only if the entity or individual does not stand to benefit financially from the successful outcome of the claim. In no such case may the attorney or agent charge a fee which is contingent, in whole or in part, on whether the matter is resolved in a manner favorable to the claimant or appellant.

(ii) For purposes of this part, a person shall be presumed not to be disinterested if that person is the spouse, child, or parent of the claimant or appellant, or if that person resides with the claimant or appellant. This presumption may be rebutted by clear and convincing evidence that the person in question has no financial interest in the success of the claim.

(iii) The provisions of paragraph (g) of this section (relating to fee agreements) shall apply to all payments or agreements to pay involving disinterested third parties. In addition, the agreement shall include or be accompanied by the following statement, signed by the attorney or agent: "I certify that no agreement, oral or otherwise, exists under which the claimant or appellant will provide anything of value to the third-party payer in this case in return for payment of our fee or salary, including, but not limited to, reimbursement of any fees paid."

In deciphering what this rule means, a fee or salary can be received for assistance with an initial claim in disregard of paragraph (c) which stipulates that fees may not be charged until an initial notice of decision has been received by the claimant and a fee agreement has been filed with the agency of original jurisdiction or the Office of General Counsel. The person or organization paying for the salary or fee must be disinterested – meaning that person or organization has no personal financial interest in a successful outcome of the claim. This rule further stipulates that a member of the claimant's family is presumed to have a personal financial interest in the outcome of a claim unless it can be proven otherwise. This is the key loophole that numerous organizations across the country are using to charge fees up to $950 or more for assistance with an initial claim.

These organizations are having family members of the claimant pay for assistance with the claim by attesting in a written statement that they are disinterested. Over the past 10 years these organizations have done thousands upon thousands of claims by charging fees which presumably have been legal under VA rules. It is doubtful that any of them are actually following the provisions of this exception. They are using the key loophole above that family members are presumed not disinterested by having family members sign a legally prepared statement that they actually are disinterested. The family member then pays the fee.

This is simply a sham. Just because the family member signs an agreement claiming to be disinterested, does not mean that the family member really is disinterested. Why would the family member pay $950 for the claim if he or she was disinterested? Naturally the family member wants a successful claim because it takes the burden of caring for mom and dad off of that family member by providing funds to take care of mom or dad.

The problem is that VA does not know about these sham operations. All of these organizations claim that VA does know what they are doing. This is not true. The rules specifically require that any third-party exception transaction must include a fee agreement that is submitted to the Office of General Counsel. None of these organizations has ever submitted such a fee agreement. They claim that this part of the regulation does not apply to them. If the OGC had received these agreements, it would have shut down this practice years ago.

The other strategy that is being used under this rule is to set up a nonprofit organization that provides free assistance with claims. Potential claimants are asked to provide contributions to this organization as a way to defray the costs of providing assistance. As long as the contributions are voluntary and not mandatory and the amount is not specified, this is probably a legal application of the third-party exception. Unfortunately, most of the practitioners who are using this approach, make contributions mandatory or no assistance is provided. Doing it this way is a clear violation of the rule above. We have obtained evidence of accredited individuals who have set up organizations under the strategy outlined in this paragraph where VA has determined these arrangements are not legal. In one case, an attorney who was doing this persisted in following his illegal pursuits after VA sent him numerous cease-and-desist letters. VA finally complained to his state Supreme Court and the attorney was temporarily disbarred.

Filing a Fee Agreement with the Agency of Original Jurisdiction

In almost all cases the Agency of Original Jurisdiction will be the Regional Office where the claim is first adjudicated. This will not always be the Regional Office in the state where the claimant lives. Under the new paperless claim system, claims can be sent to any regional office in the country under VBMS Workload rules. An effort is always made to assign the claim to the local regional office, but in many cases that may not happen.

You must file your fee agreement with the Regional Office where the claim was adjudicated. Each Regional Office has one or more Fee Agreement Coordinators whose job it is to follow the claim and issue a check if there is any back payment based on a new decision. The current list of these coordinators is found on the VA website at regionalofficefees.com. This page has the fax numbers for the regional offices but on the right-hand side is a resources panel that allows you to download the current list of coordinators as an Excel file. We also provide you a downloaded list in the appendix which is called "Regional Office Fee Coordinators."

The list contains the emails and phone numbers of these coordinators. It has been our experience that you can send attachments to emails that use "VA.gov." Otherwise, you have the fax numbers and the names as well.

Fees for a Prefiling Consultation

Prefiling Consultation
Under certain circumstances, the Office of General Counsel allows for charging a fee prior to providing assistance with a claim. This is called a prefiling consultation. This fee may only be charged if the individual requesting the consultation is not considered a "claimant" under VA rules. Also the fee cannot be tied to any success or failure involved with a decision for benefits. According to the 2004 opinion from VA General Counsel, a prefiling consultation:

"...would generally include review of records, research, counseling and any other assistance that a potential VA claimant might need short of actually preparing and presenting a specific claim for benefits. We are not aware of anything in the law governing representation of veterans that would prohibit attorneys from charging fees for this kind of pre-filing consultation."

Any individual engaged in assisting someone in any way considered a claimant must also be accredited.

The following excerpt is taken from an official document on VA's website. It is entitled

WHAT VETERANS AND THEIR FAMILIES SHOULD KNOW WHEN APPLYING FOR DEPARTMENT OF VETERANS AFFAIRS (VA) PENSION BENEFITS

Can an accredited attorney or claims agent, who is also a financial planner, charge a fee for preparing a claim for A&A?

• No. An accredited attorney or claims agent may generally charge claimants a fee only after an agency of original jurisdiction (e.g., a VA regional office) has issued a decision on a claim, a notice of disagreement has been filed, and the attorney or agent has filed a power of attorney and a fee agreement with VA.

• An exception applies when an accredited attorney or claims agent receives a fee or salary from a disinterested third party. A third party is considered disinterested only if the entity or individual would not benefit financially from the successful outcome of the claim.

• Contact us: www.va.gov 1-800-827-1000 • We note that some individuals charge a pre-filing "consultation" fee to inform a Veteran or survivor about VA benefits that may be available to them. In certain states, a license to practice law may be required to provide and charge a fee for such "consultations," which may be considered giving legal advice.

• Such "consultation" fees are unlawful if they are charged after a Veteran or survivor becomes a VA claimant by expressing to the attorney or agent an intent to file a claim for VA benefits.

• A "consultation" fee may not be tied to the outcome of a claim filed with VA if the attorney or agent provides any claims assistance–that is, an attorney or agent cannot agree to refund the fee if, after the attorney or agent assists with a VA claim, VA ultimately denies the claim. Such a fee would amount to an unlawful contingency fee or advance payment for assistance with an application for VA benefits.

• VA-recognized Veterans service organizations, including their accredited representatives, are not permitted to receive fees for their services in connection with a VA claim in any instance.

• If VA determines that an accredited attorney or agent is improperly charging a fee for preparing, presenting, or prosecuting a claim prior to the filing of a notice of disagreement, VA may suspend or cancel the individual's accreditation.

Is it permissible to offer a guarantee that a claimant will be awarded A&A or that the processing of a claim will be expedited?

• No. Such promises are patently misleading because VA is ultimately the adjudicator of claims for VA benefits.

• If VA determines that an accredited attorney or agent has misled or deceived a claimant regarding benefits or other rights under programs administered by VA, VA may suspend or cancel the individual's accreditation.

Here is a communication from the Office of General Counsel that refers specifically to this allowing for a prefiling consultation and how it is to be used.

Dear Mr. W:

This concerns your application for Department of Veterans Affairs (VA) accreditation as a claims agent. VA takes its responsibilities regarding accreditation very seriously and we need some additional information from you before we can proceed with the processing of your application. The information that you have provided indicates that you may have business interests that may conflict with the purpose of VA accreditation. Please carefully review the following information regarding VA accreditation and respond in detail to the questions posed.

It is important that we inform you that Congress has authorized VA to accredit Individuals for the sole and limited purpose of preparing, presenting, and prosecuting VA benefit claims. 38 U.S.C. § 5904; see also 38 C.F .R. § 14.627(a). VA does not accredit individuals for the purpose of promoting their separate business interests, such as those marketing financial products to veterans and their family members.

Further, in a June 2012 hearing, the U.S. Senate Special Committee on Aging (Committee) addressed concerns that some organizations are marketing financial products and services to enable claimants whose assets exceed the VA pension program's financial eligibility thresholds to qualify for VA pension benefits, including aid and attendance.

The practice of advising and assisting financially non-qualifying individuals in repositioning their assets to become eligible for needs-based VA pension is contrary to the purpose of the VA pension program, which is to provide support to veterans and survivors who have a financial need, not to protect substantial assets or preserve an estate for a beneficiary's heirs. The Committee also learned these organizations may charge substantial fees for products and services that may or may not always be in claimants' best long interest. VA has advised veterans and family members to be cautious if someone offers to move their assets around to qualify for VA pension as they could be required to repay those benefits to the government. For more information on providing representation on pension benefits, you may visit: benefits.va.gov/BENEFITS/factsheets/Iimite income/pensionprogram-and-representation.pdf.

Please respond to the following questions regarding how you intend to use your VA accreditation.

1. Please describe the general nature of your planned practice as a claims agent.
a. For what types of VA benefit claims do you intend to provide representation, e.g., aid and attendance, compensation, survivor's benefits?
b. Are there any types of VA benefit claims for which you will not be providing representation?
c. If you will not be providing representation on certain types of claims, please explain your reasoning.

2. Do you plan to market, sell, or provide advice on financial products that could help individuals qualify for VA benefits? If so, please explain.

3. Do you plan to use your VA accreditation as a tool to expand your client base for financial products and services, such as to network or advertise? If so, please explain.

4. Do you believe that your involvement with financial products and services will create a conflict of interest in your representation of VA benefit claimants? Please explain why or why not.

In addition, we note that approximately 75 percent of all of the complaints that VA's Office of the General Counsel receives regarding accredited agents involve the unlawful charging of fees. Under the laws governing representation, an accredited attorney or claims agent may generally charge claimants a fee only after an agency of original jurisdiction (e.g., a VA regional office) has issued a decision on a claim, a notice of disagreement has been filed, and the attorney or agent has filed a power of attorney and a fee agreement with VA. 38 U.S.C § 5904; 38 C.F.R. § 14.636. Therefore, charging of fees for the preparation or presentation of a claim for work on an original claim is prohibited

It has come to our attention that some individuals provide pre-filing "consultations" to inform Veterans and survivors about VA benefits that may be available to them. Charging a fee for this service is always unlawful if the fee is charged after a Veteran or survivor becomes a VA claimant by expressing to the attorney or agent an intent to file a claim for VA benefits. Moreover, a pre-filing "consultation" fee may never be tied to the outcome of a claim filed with VA if the attorney or agent provides any claims assistance-this includes arrangements where an attorney or agent agrees to refund the fee if, after the attorney or agent assists with a VA claim, VA ultimately denies the claim. Such a fee would amount to an unlawful contingency fee or advance payment for assistance with an application for VA benefits. Be advised that in certain states, a license to practice law may be required to provide and charge a fee for such pre-filing "consultations," as the consultations may be considered giving legal advice. Please respond in detail to the following questions, which will help us ensure that your planned practice does not involve the charging of improper fees.

The Prefiling Consultation Is a Result of a Precedent Opinion Letter

Department of Veterans Affairs
Office of the General Counsel
Washington DC, 20420

May 24, 2004

In Reply Refer to: 022

The Honorable Lane Evans
Ranking Democratic Member
Committee on Veteran's Affairs
US House of Representatives
Washington, DC 20515

Dear Congressman Evans:

I am responding to your April 7, 2004 letter to the secretary of Veterans Affairs, which asks for our interpretation of 38 U.S.C. § 5904 governing representation of veterans before the Department of Veterans Affairs (VA). Specifically, you ask whether section 5904 permits attorneys to charge veterans for consultation that occurs prior to the filing of a claim for VA benefits. We conclude that attorneys may charge veterans for pre-filing consultations without violating the attorney fees limitation contained in section 5904.

You expressed concern that the criminal penalties for violating section 5904, see 38 U.S.C. § 5905, might discourage attorneys from advising elderly and disabled veterans about their ability for certain Federal benefits. To illustrate your concern, you listed two examples of situations where attorneys might be unsure of their obligations under section 5904. These examples are essentially identical in that they both involve elderly veterans who obtain general legal advice concerning eligibility for Federal benefits, including VA benefits. Though not stated in your examples, we assume that services rendered by attorneys in such situations would generally include review of records, research, counseling and any other assistance that a potential VA claimant might need short of actually preparing and presenting a specific claim for benefits. We are not aware of anything in the law governing representation of veterans that would prohibit attorneys from charging fees for this kind of pre-filing consultation.

Section 5904 (a) authorizes the Secretary to "recognize any individual as an . . . attorney for the preparation, presentation and prosecution of claims" for VA benefits. However, an attorney may not charge a fee "in connection with the proceeding before the Department . . . for . . . services provided before the date on which the Board of Veterans Appeals first makes the final decision in the case." 38 U.S.C. § 5904(c)(1). Attorneys may charge a fee for services provided after the board makes its first final decision only if the veteran retains the attorney within a year of the Board's decision. Id. Your letter suggests that the phrase "in connection with the proceeding before the Department" in section 5904(c)(1) means that, in addition to pre-filing consultation, fees may be charged for preparing and presenting a claim for VA benefits. We respectfully disagree. When read together, subsections (a) and (c)(1) of section 5904 indicate that the "preparation" and "presentation" of a claim are among the "services" that attorneys may provide to claimants "in connection with" a VA proceeding. In our view, section 5904 as a whole defines the scope of attorney services for which these are prohibited prior to a final Board decision on the claim.

To the extent that there is any ambiguity about whether claim preparation and presentation are included in the prohibition against attorney fees, VA has resolved that ambiguity in regulations that govern representation of VA claimants. The regulations define a VA "claimant" as "a person who has filed or has expressed to a representative, agent, or attorney an intention to file a written application for determination of entitlement to benefits provided under title 38, United States Code, and implementing directives." 38 C.F.R. § 14.627(g). An attorney may be accredited to represent a veteran in connection with a claim for VA benefits upon submission of a power of attorney or signed writing on the attorney's letterhead stating that the claimant has authorized the representation. 38 C.F.R. §§14.629(c), 14.631(a) and (b). Accredited attorneys may charge a fee for their services "only" if the Board has promulgated a final decision on the claim and the claimant retained the attorney within one year of the Board's decision. 38 C.F.R. § 20.609(c)(1). Finally, the regulations provide that VA shall cancel an attorney's accreditation if the VA General Counsel finds that the attorney demanded or accepted "unlawful compensation for preparing, presenting, prosecuting or advising or consulting, concerning a claim." 38 C.F.R. § 14.633(c)(3). In our view these regulations adequately inform attorneys of their obligations under current law. Under no circumstances may attorneys charge veterans for preparing and presenting claims for VA benefits if those services are provided prior to a final Board decision on the claim.

Legislative history supports our interpretation of the statutory limitation upon attorney fees. Before 1988, the law did not prohibit the payment of nominal fees to attorneys for preparing and filing claims for VA benefits. See 38 U.S.C. § 3404(c) (1979) (authorizing maximum fees of ten dollars" for the preparation, presentation and prosecution of claims"); 38 U.S.C. § 551 (1942) (authorizing maximum attorney fees of ten dollars "as may be required in the preparation and execution of necessary papers"). However, section 104(a) of the Veterans' Judicial Review Act (VJRA), Pub. L. No. 100-687, Div. A, § 104(a), 102 Stat. 4105, 4108 (1988), repealed the statutory ten dollar fees afforded to attorneys for claim-preparation services and enacted the fee provisions in current section 5904. In its summary of a bill that preceded the enactment of the VJRA, the House Committee on Veterans' Affairs stated that the attorney fees provision "would prohibit attorneys from charging any fee in connection with an application for VA benefits." H.R. Rep. No. 100-963, at 5 (1988), reprinted in 1988 U.S.C.C.A.N. 5782, 5786.

The Committee went on to report that the primary purpose for the historical limitation of attorney fees was "to protect the interests of veterans from the perceived threat that agents or attorneys would charge excessive fees for their services, which essentially required only the preparation and presentation of an application for the benefits." Id. at 16, reprinted in 1988 U.S.C.C.A.N. at 5798. Another purpose was to maintain the "informal and non-adversarial" structure of VA's claims adjudication process. Id. The committee intended that the legislation would maintain that informal structure by prohibiting attorneys from charging fees for services rendered before a VA regional office issues a statement of the case concerning a challenge decision. Id. at 26, reprinted in 1988 U.S.C.C.A.N. at 5808. To remove any doubt concerning its intentions, the Committee concluded its analysis by emphasizing that the attorney fees provisions provide "explicitly that no fees may be charged for any services rendered prior to the issuance of the statement of the case." Id. at 29, reprinted in 1988 U.S.C.C.A.N. at 5811. Prior to enactment of the VJ RA, the Senate and House Committees on Veterans' Affairs entered into a compromise agreement, which expanded the fee limitation to include all services rendered prior to the first final Board decision on a claim. See Explanatory Statement on Compromise Agreement on Division A, 134 CONG. REC. § 16650 (daily ed. Oct. 18, 1988), reprinted in 1988 U.S.C.C.A.N. 5834, 5836-38. See also in re Smith, 1 Vet. App. 492, 496-511 (1991) (Steinberg J. concurring) (analyzing the legislative history of the VJ RA attorney fees provisions).

The attorney in your first example is distinguished only by the fact that he "assists a veteran in completing an application for pension." To the extent that, after consultation, the veteran expressed to the attorney an intention to file a specific claim for VA benefits and the attorney charged the veteran for preparing the claim, the attorney did so in violation of section 5904. For that attorney, the better practice would have been to charge the veteran for the pre-filing consultation and simply prepare the claim on a pro bono basis.

I hope this information is helpful to you. Please let me know if I can be of further assistance.

Sincerely yours,
Tim S. McClain,
General Counsel

Prefiling Consultations Are Allowed with Persons Who Are Not Considered Claimants

Assistance with a claim for veterans benefits is defined in Title 38 CFR §14.627 as the accreditation authority granted by VA to representatives, agents, and attorneys to assist "claimants" in the preparation, presentation, and prosecution of claims for VA benefits. Preparation and presentation of claims not only applies to assisting with paperwork but also includes providing specific advice to a "claimant" for his or her particular claim. VA defines a "claimant" as . . . "a person who has filed or has expressed to a (accredited) representative, (accredited) agent, or (accredited) attorney an intention to file a written application for determination of entitlement to benefits provided under title 38, United States Code, and implementing directives."

Some practitioners prefer to call a prefiling consultation an "Eligibility Review." It certainly sounds better and is more to the point of what this consultation is all about. It is very important that if someone contacts you and wants to file a claim for benefits, that person is now a claimant and you cannot charge a fee for Eligibility Review. On the other hand, unless that person has previously filed a claim or previously talked to an accredited individual who has started that process, in our opinion, that person is not a claimant because they don't even know if they are eligible or entitled to benefits. We always assume that they know nothing about what they are requesting and we are usually right.

The rules pertaining to charging fees only apply to accredited representatives. There seems to be a general misunderstanding among the public that there is a prohibition on charging fees for assistance with claims for all individuals. This is not true. We discuss the history of this prohibition further in the section titled "Legislative History of Title 38 U.S.C. § 5905 – Prohibition on Charging Fee."

Fees for Opinions, Medical Record Reviews and DBQ Exams

The Department of Veterans Affairs routinely pays individuals for their services in developing the claim for adjudication. This is done through third party companies paid by VA to contract with medical practitioners and other experts to provide the Regional Office with opinions for service connection, medical record reviews, independent medical opinions and DBQ exams.

There appears to be no prohibition on paying these fees to prepare the claims for a rating decision. Likewise, many accredited attorneys who are assisting veterans with their claims will pay for these services on behalf of the veteran. This is common practice and is usually done after the filing of a notice of disagreement. This likely means that there is no prohibition on paying for these services prior to a notice of disagreement as is the case with the Regional Office development of the claim.

It is our personal opinion that any individuals who provide these services should be allowed to receive payments as long as these individuals are not involved in the actual preparation, presentation and prosecution of the claim. It should not matter whether these individuals are accredited or not. Our personal opinion does not represent any legal opinion on this matter.

Fees for Services Not Relating to a Claim

Many individuals – whether accredited or not – provide products or charge fees for services to veterans or their survivors who may eventually initiate a claim for benefits. If these products or services are provided at arms-length and not tied to the success or failure of a claim for veterans benefits, it would be difficult if not impossible for the Department of Veterans Affairs to determine that this was a fee for assistance with the preparation, presentation and prosecution of a claim.

It is our personal opinion that in order for such services to not be construed as a fee for assistance, there must be no coercion for providing the products or services in exchange for cost free assistance with a claim. Also the purchase of products or services by a claimant cannot be tied to the outcome of the claim. In other words, the providing of products or services in conjunction with a claim must be mutually exclusive from the actual filing of the claim. Finally, there can be no evidence of any fraud in these transactions. VA does not condone this practice but does recognize that it exists. Do not take our personal opinion as a legal opinion.

In testimony before Congress in 2011 Deputy under Secretary for Disability Assistance, Thomas J. Pamperin, acknowledged that these financial transactions are likely occurring. Here is a quote from that testimony.

Consequently, the bill would be unlikely to deter the solicitation or receipt of any fee or compensation for the provision of advice on how to transfer or shield financial assets in order to become eligible for certain VA benefits. Further, the proposed penalty provision could seemingly be easily circumvented by charging for services other than those specified in the bill, while also providing services that the bill is intended to cover.

Witness Testimony of Thomas J. Pamperin, Deputy Under Secretary for Disability Assistance, Veterans Benefits Administration, U.S. Department of Veterans Affairs - Accompanied by Richard Hipolit

Hearing on 07/07/2011: Legislative Hearing on H.R. 923, H.R. 1025, H.R. 1826, H.R. 1898, and H.R. 2349

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity to testify and present the views of the Department of Veterans Affairs (VA) on several legislative items of great interest to Veterans. Joining me today is Richard Hipolit, Assistant General Counsel.

H.R. 1826 would amend 38 U.S.C. § 5905 to reinstate in modified form an earlier provision that had provided criminal penalties for charging improper fees in connection with representation in a claim for benefits before VA. In particular, it would impose such penalties for anyone who, in connection with a proceeding before VA, solicits, contracts for, charges, or receives, or attempts to solicit, contract for, charge, or receive, any fee or compensation in connection with either the provision of advice on how to file a claim for VA benefits or the preparation, presentation, or prosecution of such a claim before the date on which a notice of disagreement is filed.

In 2006, Congress enacted Public Law 109-461, which amended VA's statutory scheme relating to attorney or agent representation in Veterans benefit cases before VA. Among other things, Public Law 109-461 authorized attorneys and agents to charge fees for services provided to claimants after the filing of a notice of disagreement with respect to a case. The law also amended 38 U.S.C. § 5905 by deleting a provision imposing criminal penalties for soliciting, contracting for, charging, or receiving improper fees for representation in a benefit claim.

In the past few years, VA has received complaints from various sources about individuals and companies charging, or attempting to charge, fees for providing advice or assistance concerning the VA claims process before the filing of a notice of disagreement. VA is also aware that certain individuals or firms may have charged Veterans for financial services, which later proved to be ineffective, designed to assist them in qualifying for VA benefits by transferring or shielding assets that would otherwise disqualify them.

The bill would subject to criminal penalty the solicitation or receipt of any fee or compensation for providing "advice on how to file a claim for benefits." Because this bill involves criminal penalties, courts are likely to interpret the phrase "advice on how to file a claim for benefits" narrowly as referring to advice on how to complete an application for VA benefits or where to submit such an application. Consequently, the bill would be unlikely to deter the solicitation or receipt of any fee or compensation for the provision of advice on how to transfer or shield financial assets in order to become eligible for certain VA benefits. Further, the proposed penalty provision could seemingly be easily circumvented by charging for services other than those specified in the bill, while also providing services that the bill is intended to cover. The criminal penalties contemplated by H.R. 1826 may provide some deterrent to persons who would take advantage of claimants for VA benefits, and VA supports in principle the protection of claimants from unscrupulous fee practices, but we doubt that this bill would effectively address the entire scope of the problem. In addition, we defer to the Department of Justice (DoJ) on whether the new provision imposing criminal penalties would be enforceable as a practical matter, and whether DoJ would devote scarce resources to its enforcement.

Legislative History of Title 38 U.S.C. § 5905 – Prohibition on Charging Fees

It is important to know that federal code pertaining to the charging of fees for assistance with veterans claims prior to an initial notice of decision only applies to accredited representatives.

Contrary to that which is published in the media and statements by congressmen and officials representing VA benefits, there is no federal law that prohibits non-accredited individuals from charging a fee for assistance with veterans claims. On the other hand, assistance with claims cannot be provided unless that person who is providing the assistance has "accreditation authority" from the Department of Veterans Affairs.

Such a general prohibition on charging fees did exist prior to 2006. Here is the rule prior to 2006.

38 U.S.C. § 5905. Penalty for certain acts Whoever (1) directly or indirectly solicits, contracts for, charges, or receives, or attempts to solicit, contract for, charge, or receive, any fee or compensation except as provided in sections 5904 or 1984 of this title, or (2) wrongfully withholds from any claimant or beneficiary any part of a benefit or claim allowed and due to the claimant or beneficiary, shall be fined as provided in title 18, or imprisoned not more than one year, or both.

In 2006, Congress enacted Public Law 109-461, which amended VA's statutory scheme relating to attorney or agent representation in Veterans benefit cases before VA. Among other things, Public Law 109-461 authorized attorneys and agents to charge fees for services provided to claimants after the filing of a notice of disagreement with respect to a case. The law also amended 38 U.S.C. § 5905 by deleting a provision imposing criminal penalties for soliciting, contracting for, charging, or receiving improper fees for representation in a benefit claim.

Here is how 38 USC Part 4, Chapter 5905 reads today – as amended by Section 101 of Public Law 109-461 and signed into law on December 22, 2006 by President Bush

38 U.S.C. § 5905. Penalty for certain acts Whoever wrongfully withholds from any claimant or beneficiary any part of a benefit or claim allowed and due to the claimant or beneficiary, shall be fined as provided in title 18, or imprisoned not more than one year, or both.

The Attempt to Reinstate a General Prohibition on Charging Fees

In 2010, ABC Action News of Tampa, Florida ran several investigative reports on an individual charging $2,500 for processing claims for VA benefits. They also interviewed Congressman Gus Bilirakis who represented the area and who still represents the Tampa congressional district. In the TV interview, he was surprised and concerned about the situation and promised to find out more about what was going on nationally by talking to the Secretary of the Department of Veterans Affairs. Congressman Bilirakis was a member of the House Committee on Veterans Affairs.

On May 11, 2011, Congressman Bilirakis introduced H.R. 1826 which was a bill to amend Title 38 USC 5905 to include a general prohibition on charging fees for VA benefits. No such law existed at the time. Here is the language of the bill.

May 11, 2011. To amend title 38, United States Code, to reinstate criminal penalties for persons charging veterans unauthorized fees.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. REINSTATEMENT OF PENALTIES FOR CHARGING VETERANS UNAUTHORIZED FEES.

(a) In General- Section 5905 of title 38, United States Code, is amended to read as follows:

Sec. 5905. Penalty for certain acts

Except as provided in section 5904 or 1984 of this title, whoever commits any of the following acts shall be fined as provided in title 18, or imprisoned for not more than one year, or both:

(1) In connection with a proceeding before the Department, the act of soliciting, contracting for, charging, or receiving, or attempting to solicit, contract for, charge, or receive, any fee or compensation in connection for--

(A) the provision of advice on how to file a claim for benefits under the laws administered by the Secretary; or

(B) the preparation, presentation, or prosecution of such a claim before the date on which a notice of disagreement is filed in a proceeding on the claim.

(2) The act of unlawfully withholding from any claimant or beneficiary any part of a benefit or claim under the laws administered by the Secretary that is allowed and due to the claimant or beneficiary.

(b) Effective Date- The amendment made by subsection (a) shall apply with respect to acts committed after the date of the enactment of this Act.

In July 2011, the bill came before the House Committee on Veterans Affairs for a hearing. A number of individuals testified concerning this bill including representatives of several Veterans Service Organizations. The most important testimony was from the Veterans Benefits Administration. Essentially, VA itself shot down the bill on the premise that it was generally unenforceable and that VA and the Department of Justice did not want to expend resources on pursuing any infractions of this proposed law in court. Here is VA's testimony for the hearing.

Witness Testimony of Thomas J. Pamperin, Deputy Under Secretary for Disability Assistance, Veterans Benefits Administration, U.S. Department of Veterans Affairs, Accompanied by Richard Hipolit, VA Deputy General Counsel

Hearing on 07/07/2011: Legislative Hearing on H.R. 923, H.R. 1025, H.R. 1826, H.R. 1898, and H.R. 2349

H.R. 1826 would amend 38 U.S.C. § 5905 to reinstate in modified form an earlier provision that had provided criminal penalties for charging improper fees in connection with representation in a claim for benefits before VA. In particular, it would impose such penalties for anyone who, in connection with a proceeding before VA, solicits, contracts for, charges, or receives, or attempts to solicit, contract for, charge, or receive, any fee or compensation in connection with either the provision of advice on how to file a claim for VA benefits or the preparation, presentation, or prosecution of such a claim before the date on which a notice of disagreement is filed.

In 2006, Congress enacted Public Law 109-461, which amended VA's statutory scheme relating to attorney or agent representation in Veterans benefit cases before VA. Among other things, Public Law 109-461 authorized attorneys and agents to charge fees for services provided to claimants after the filing of a notice of disagreement with respect to a case. The law also amended 38 U.S.C. § 5905 by deleting a provision imposing criminal penalties for soliciting, contracting for, charging, or receiving improper fees for representation in a benefit claim.

In the past few years, VA has received complaints from various sources about individuals and companies charging, or attempting to charge, fees for providing advice or assistance concerning the VA claims process before the filing of a notice of disagreement. VA is also aware that certain individuals or firms may have charged Veterans for financial services, which later proved to be ineffective, designed to assist them in qualifying for VA benefits by transferring or shielding assets that would otherwise disqualify them.

The bill would subject to criminal penalty the solicitation or receipt of any fee or compensation for providing "advice on how to file a claim for benefits." Because this bill involves criminal penalties, courts are likely to interpret the phrase "advice on how to file a claim for benefits" narrowly as referring to advice on how to complete an application for VA benefits or where to submit such an application. Consequently, the bill would be unlikely to deter the solicitation or receipt of any fee or compensation for the provision of advice on how to transfer or shield financial assets in order to become eligible for certain VA benefits. Further, the proposed penalty provision could seemingly be easily circumvented by charging for services other than those specified in the bill, while also providing services that the bill is intended to cover. The criminal penalties contemplated by H.R. 1826 may provide some deterrent to persons who would take advantage of claimants for VA benefits, and VA supports in principle the protection of claimants from unscrupulous fee practices, but we doubt that this bill would effectively address the entire scope of the problem. In addition, we defer to the Department of Justice (DoJ) on whether the new provision imposing criminal penalties would be enforceable as a practical matter, and whether DoJ would devote scarce resources to its enforcement.

The proposed legislation never made it out of committee and to our knowledge no effort to pass any legislation of this type has made it out of committee since. Imposing a general prohibition on charging fees appears to be a difficult issue to reenact into law.

 

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