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

<RULE> DEPARTMENT OF VETERANS AFFAIRS <CFR>38 CFR Part 14</CFR> <RIN>RIN 2900-AR93</RIN> <SUBJECT>Fee Reasonableness Reviews; Effect of Loss of Accreditation on Direct Payment</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Department of Veterans Affairs. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of Veterans Affairs (VA) is issuing this final 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 a claims agent's or attorney's VA accreditation. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> This final rule is effective April 1, 2025. <E T="03">Applicability date:</E> The provisions of this final rule shall apply to all fee allocation notices issued on or after the effective date of this final rule. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> 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.) </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> On December 21, 2023, VA published in the <E T="04">Federal Register</E> (88 FR 88,295) a 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 a claims agent's or attorney's VA accreditation. The proposed rule allowed for a comment period ending on February 20, 2024. During the comment period, VA received 15 comments, which are discussed below. After considering these comments, VA has decided to finalize the proposed rule without amendment. <HD SOURCE="HD1">Comments on Representatives and Fees Generally</HD> One commenter stated that “the tone of [VA's] proposal suggests that attorney involvement in the [claims] process is part of some problem.” VA thanks the commenter for this comment, but, to be clear, VA takes no issue with VA-accredited attorneys and claims agents (hereinafter “agents”) assisting claimants and recognizes the important service they provide. But the fact of the matter is that there has been an increase in multi-attorney and multi-agent cases and, when those agents and attorneys request direct payment, VA needs an efficient process to allocate fees in all those cases. This rule provides such a process. And this rule's process will (1) empower agents and attorneys to negotiate fees on their own and (2) deliver fees to agents and attorneys more expeditiously (and benefits to veterans more expeditiously). Those are not anti-attorney or anti-agent measures or results. Another commenter stated that fees should be a matter between a veteran and representative, and that representatives should not get fees from VA. VA thanks the commenter, but—to be clear—VA does not pay representatives independently. VA only pays representatives (out of a claimant's past-due benefits) when the claimant and the representative have requested it. And, under this rule, VA will only get involved with the question of fees when (1) direct payment is requested or (2) a fee reasonableness review is requested or otherwise warranted. Moreover, consistent with this commenter's general view on fee matters, this rule sets forth reasonable default allocations that will allow claimants and representatives to resolve fee matters on their own in many cases. Nevertheless, if that effort is unsuccessful, VA's Office of General Counsel (OGC) remains available to review and decide a reasonable fee allocation for the case. A third commenter stated that VA should “require agents or attorneys to request a fee reasonableness review[ ] in order to receive direct payment.” VA appreciates this comment, but has not been provided evidence of widespread acceptance of unreasonable fees that would warrant such a drastic action of not releasing <E T="03">any</E> fees absent individualized review. Particularly given the workload burden that approach would create, and the legal presumption of fee reasonableness for certain agents or attorneys under 38 CFR 14.636(f)(1), VA declines to implement that approach at this time. VA makes no changes in response to these comments. <HD SOURCE="HD1">Comments on Unaccredited Companies and Upfront Fees</HD> One commenter stated that the proposed rule was excellent, but questioned how VA was dealing with unaccredited companies that charge high fees to veterans. Another commenter similarly stated support for limitations on fees, but was concerned about individuals and companies charging upfront fees. A third commenter stated that VA needs to shut down unaccredited companies that “rob veterans, botch claims, and cost vet[eran]s benefits.” The commenter requested that VA refer these companies to its Office of Inspector General (OIG) and the Department of Justice (DOJ). A fourth commenter stated that VA should be taking action against unaccredited actors, rather than further regulating accredited agents and attorneys. The commenter stated that this rule “creates more opportunity for unaccredited actors to enter this space.” The issues of unaccredited companies and upfront fees are beyond the scope of this particular rulemaking. But they are issues VA is actively pursuing in other realms, including coordination with OIG and DOJ, and we do want to take this opportunity to reiterate the following: No individual or organization that lacks VA accreditation may charge any fee for preparation, presentation, or prosecution of a VA benefits claim. 38 U.S.C. 5901. And no individual or organization (even with accreditation) may charge a fee to a veteran for services on a VA benefits claim prior to the initial decision on the claim. 38 U.S.C. 5904(c). Veterans can protect themselves against unaccredited companies involved in predatory practices by only engaging with VA-accredited representatives on VA benefits issues. Moreover, in view of VA's oversight of and authority regarding accredited representatives, veterans engaging with VA-accredited representatives can avail themselves of the fee reasonableness process described in this rule if they believe they are being charged an unreasonable fee. As to the fourth commenter's allegation that this rule “creates more opportunity for unaccredited actors to enter this space,” we do not understand the basis for this allegation. To the extent the allegation is related to VA's statement that including claimants in the default allocation of § 14.636(i)(1)(ii) “accounts for the possibility that the claimant may have entered into a non-direct pay agreement with other agents or attorneys” (88 FR at 88,296), that statement is referring to <E T="03">accredited</E> agents and attorneys, not unaccredited actors, as confirmed by § 14.636(b) (“Only accredited agents and attorneys may receive fees from claimants . . . .”). Alternatively, to the extent the allegation is based on the commenter's belief that this rule “could create” a disincentive for accredited agents or attorneys to represent claimants, we disagree with that premise, as further explained below. VA makes no change to this rule in response to these comments, but nevertheless thanks the commenters for raising this important issue. <HD SOURCE="HD1">Comments on Declining Direct Payment for Agents or Attorneys Whose VA Accreditation Has Been Terminated</HD> One commenter expressed “full support” for VA's proposal to decline direct payment for agents or attorneys who have had their accreditation revoked (§ 14.636(h)(1)(iii)). Another commenter agreed with such an approach, and applauded VA's efforts to strengthen regulations that protect veterans and their dependents from unreasonable fees. A third commenter, however, was concerned “with the impact this policy may have on those who voluntarily terminate their accreditation due to illness or retirement.” The commenter questioned “whether these individuals will lose their fees or be forced to stay accredited to receive earned fees even when they are no longer taking on new clients.” VA thanks each of the commenters on this issue. As to the last commenter's question, under this rule, even though there will be no direct payment for agents or attorneys whose VA accreditation has been terminated, that does not mean they lose the right to previously-earned fees or are forced to stay accredited to retain fee eligibility. Rather, upon receipt of a fee allocation notice, if they believe they deserve a fee from the award at issue, they can work out an arrangement with the other parties or (if that is unsuccessful) can request an OGC fee reasonableness review. In sum, while VA will no longer directly pay agents or attorneys who have lost their accreditation, this rule still allows those individuals to pursue a fee if they believe they have earned one in the case. VA makes no change in response to these comments. <HD SOURCE="HD1">Comments on Current Fee Reasonableness Wait Times</HD> One commenter stated that their law firm has five cases that have been pending fee reasonableness review since 2022, even though all the attorneys on the case were from the same firm. A similar commenter stated that they are currently waiting for a fee reasonableness determination, there is no timeline for such a determination, and that the process is haphazard. A third commenter stated that fee matters are “often inexplicably and systematically delayed.” A fourth commenter described their “unpleasant experience” waiting over 430 days for a fee reasonableness review that “lacks any sort of transparent business process.” This commenter stated that the case was referred for a reasonableness review simply because another attorney—who did not represent the claimant at the Board of Veterans' Appeals (Board) and now r ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 66k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━