Questions on Fees from NOSSCR Spring 2018

We ran out of time at the NOSSCR conference in the discussion of attorney fees.  I answer those questions here:

I have had several instances recently where I did all the case prep, but then did not rep the client at the hearing (fired the week before the hearing, client with dementia doesn't remember hiring me and then hires another attorney, client became unresponsive). The ALJs awarded fees in all cases after fee petition, but fee is not withheld. Clients refuse to pay-- what do I do?

 The agency does not withhold fees for a discharged or withdrawing representative.  You have to collect the fee from the claimant or representative payee.  The only way to turn that award into something collectible is to turn it into a state court judgment.  Consult your state rules about suing your client -- most carriers frown on it and if the claimant is demented, that person may try to relitigate the fee award from the ALJ.

Is it proper for an ALJ to reduce a requested fee on a fee petition on the basis that the fee petition was "delayed," e.g., 6 months after the Notice of Award was issued?

Is there a reason for the delay other than the press of business?  If the fee petition seeks less than the entire withholding, then the delay has prejudiced the claimant by delaying the receipt of the residual withholding.

Do we have any recourse for this scenario: we had an AC remand awarded upon second hearing for a closed period of benefits. Even though the rep paperwork and fee agreement were on file, SSA failed to withhold our fee. The client won't return our calls. HELP! 

I successfully represented a client and the Judge approved the fee agreement.  The client was paid the full amount of the back pay but SSA mistakenly did not withhold my fee.  Suggestions... 

Ask the field office in an SSI case or the processing center/OCO in a DIB case to create an overpayment and pay you directly -- assuming that you are eligible for direct payment.  You need to document your collection efforts to qualify for the creation of the overpayment.  The agency will not declare an overpayment without that showing nor if the claimant is deceased.

I've had problems in which SSA is failing to release past-due benefits to my clients while my fee petitions are pending. Shouldn't SSA be releasing 75% of those benefits to my clients in the interim? (Instead of telling my clients that "your lawyer is holding up payment of your benefits?")

A writ of mandate comes to mind.  Don't file one, threaten to file one.  If this is a Title II claim, it is a rogue in the office.  If this is a Title XVI claim, the claimant gets the benefit in three payments with the bulk coming at the end of 12 months.

How should I handle getting a 1099 from SSA every year? Why does no one ever directly address this with NOSSCR or SSA or IRS?

File a schedule C that declares the income reported on the 1099 and then report the transfer of the entire corpus of those funds to the firm or other entity.  NOSSCR cannot control the IRS reporting requirements; nor does SSA.

 how do you address the fee with the client at signup in cases where the ALJ finds disability 5 1/2 months prior or say 7 months prior?

Anticipate the scenario as part of the fee agreement.  You can reserve the right to seek administrative review of the fee agreement or opt into a fee petition process in those cases.  We take risk in representing claimants of either a small fee or no fee.  This is part of the process.

What is the review process available if the Payment Center disapproves your fee agreement after an ALJ approved it (Assuming the PC disapproved for an incorrect reason)?

Seek administrative review of the fee agreement disapproval by the PC.  Due process requires a notice and opportunity to be heard.   See HALLEX I-1-2-49. 

Prior attorney withdraws but does not waive.  Does SSA send copy of favorable decision or award letter.  You file fee petition.  How does prior attorney know when to file?

SSA notifies the representative to file a fee petition and/or the representative files a fee petition on discharge/withdrawal. 

If a client fires a rep and hires someone else, and the previous rep withdraws, why does the new rep still have to do a fee petition?

Because the withdrawing representative still has the right to seek a fee.  If the previous representative waives, then the ALJ can approve the current representative fee's fee agreement.

It took almost a year for my fee agreement to be approved. SS told me my clients full backpay would not be disbursed until my fee agreement was approved. This didn't happen. They gave her everything. Now I have to collect from her direct. How can I prevent this from happening in the future?

The backpay should be released and the withholding held back.  If I were told that SSA would not release the PDB until my fee was set, I would demand that the agency release that 75% of the PDB to the client.  As to release of the withholding, it happens because the agency makes mistakes. 

Subsequent Applications and Fees -- Oh My

On June 3, we discussed the ethics and strategy behind a subsequent application while the claimant has a complaint for review pending with the federal courts -- Just Do It.  The problem for the representatives extend beyond the cutting off of the past-due benefit accumulation.  The fees get messy.

1.  The Subsequent Application Gets Paid

Whether by initial determination, reconsideration determination, or hearing, subsequent applications get paid with fair regularity.  These are cases on the cusp where reasonable minds could differ; you contend that the ALJ acted unreasonably in denying the case now pending in court.  These cases get paid, expect it.

The typical paradigm is the fee agreement process.  As long as the operative fee agreement is 25% of the past due benefits or $6,000, whichever is less, applies to the subsequent application, the fee agreement will get approved and the representative will get paid.  HALLEX I-1-2-16 states that the ALJ or the AC will approve or disapprove the fee agreement on the facts before the agency.  POMS GN 03940.038 gets into more detail but to the same result.  When the claimant receives a favorable decision on a subsequent application, SSA will approve the fee agreement and pay the withheld fees so long as the fee agreement meets the requirements and the representative is eligible.

What HALLEX and POMS do make clear is that all the cases that the claimant has constitute one case for fee purposes.  That $6,000 ceiling on the fees for the subsequent application continues to apply if and when the district court remands the case back to the agency for further proceedings.  There is no reset button and the claimant is not liable for up to $6,000 twice.  One continuous period deserves one fee.

     a. No Tiering and Same Representative(s)

The last fee agreement controls the fees in the case.  If the representative had the claimant sign a new fee agreement on filing the subsequent application, that is the fee agreement that controls all the fees.  Remember, one fee for the entire case.  All representatives must sign the same fee agreement.  The usual conditions apply.

If the fee agreement does not make an exception to the ceiling for remanded cases, the fee agreement continues to apply.  If the representative received $2,000 on the subsequent claim, the maximum that representative can get on the remanded case for agency work is $4,000.  The time to request administrative review of the fee ceiling -- that deadline is triggered by the notice of award or other payment document on the first favorable decision, the one on the subsequent application.  Absent that timely request for administrative review of the fee filed before the court remanded the case, the representative is stuck with the ceiling.  HALLEX I-1-2-14.

     b.  Tiering or Different Representatives

If the fee agreement provides for a fee without reference to a ceiling on remand, the conditions for approval of the fee agreement no longer apply.  If the claimant appoints different representatives or they all don't sign the same fee agreement, the conditions for approval of the fee agreement no longer apply.  These circumstances manifest for the first time after a favorable decision and cause a rescission of the approval of the fee agreement on the subsequent application.  HALLEX I-1-2-16. 

Whatever fee the representative received on the subsequent application, that authorization to charge and receive a fee is no more.  It is gone.  The representative now holds an unauthorized fee with all of the potential ramifications for holding an unauthorized fee.  Prudence suggests that moving that fee amount to a client trust account is the minimum required. 

All the representatives must file a fee petition with the decision maker that made the last favorable decision and order rescinding approval of the fee agreement on the subsequent application.  The representative must cover all the fees that he/she will seek to charge and receive. 

Example:

Claude Claimant goes through the process and receives a denial of review from the Appeals Council.  CC and Rachel Representative refer that case to Andy Attorney.  RR advises CC to file a new claim, which he does. 

While AA goes through the litigation process, RR presses the claim forward on the subsequent application.  CC receives a favorable decision and receives an award for $16,000 is past due benefits.  RR receives a fee agreement approval and a fee of $4,000 for her services.  AA wins the federal court action, obtaining a remand for another hearing.  The Appeals Council affirms the subsequent grant and remands the first claim to an administrative law judge to comply with the order of the court. 

On remand, AA represents CC.  The ALJ issues a fully favorable decision awarding CC a finding of disability for the earlier period and rescinding the fee agreement.  For the period not covered by the subsequent claim, SSA owes CC an additional $60,000 in PDB.  RR must now move the $4,000 to trust; she is no longer authorized to hold that fee.  RR and AA must file fee petitions to charge and receive a fee.  AA can also apply for fees in federal court, subject to the offset for any EAJA fee received.

If RR represented CC at the remand hearing without a tiered fee agreement and did not request administrative review after the favorable decision/determination on the subsequent claim, the most that RR could receive for that last hearing (and the first one that lead to the court action) is $2,000. 

It doesn't matter if AA had a tiered fee agreement, AA and RR are not in the same firm and the conditions to approve the fee agreements no longer apply.  The agency will only approve on fee agreement.  Two fee petitions will have to be filed. 

The lesson is that the subsequent application can cause fee issues later.  As we discussed earlier this month -- it is ethically required to advise the client of the advantages and disadvantages to the client of a new application.  Convincing the client not to file a subsequent claim because it makes AA's fees problematic is poor form.  Client's interests first and foremost.  We are fiduciaries and that is how fiduciaries act.