Temporary Extension of Attorney Fee Payment System to Title XVI; 5-Year Demonstration Project Extending Fee Withholding and Payment Procedures to Eligible Non-Attorney Representatives; Definition of Past-Due Benefits; and Assessment for Fee Payment Services, 16720-16726 [E7-6383]

Agencies

• Social Security Administration

[Federal Register Volume 72, Number 65 (Thursday, April 5, 2007)]
[Rules and Regulations]
[Pages 16720-16726]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-6383]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

[Docket No. SSA 2006-0097]
RIN 0960-AG35


Temporary Extension of Attorney Fee Payment System to Title XVI; 
5-Year Demonstration Project Extending Fee Withholding and Payment 
Procedures to Eligible Non-Attorney Representatives; Definition of 
Past-Due Benefits; and Assessment for Fee Payment Services

AGENCY: Social Security Administration.

ACTION: Interim final rules with request for comments.

-----------------------------------------------------------------------

SUMMARY: We are issuing these interim final rules to reflect in our 
regulations three self-implementing statutory provisions in the Social 
Security Protection Act of 2004 (SSPA) and three related self-
implementing provisions in earlier legislation. These earlier 
provisions are in the Omnibus Budget Reconciliation Act of 1990 (OBRA), 
the Social Security Independence and Program Improvements Act of 1994 
(SSIPIA), and the Ticket to Work and Work Incentives Improvement Act of 
1999 (TWWIIA).

DATES: These rules are effective April 5, 2007. To be sure your 
comments are considered, we must receive them no later than June 4, 
2007.

ADDRESSES: You may give us your comments by: Internet through the 
Federal eRulemaking Portal at https://www.regulations.gov; e-mail to 
regulations@ssa.gov; telefax to (410) 966-2830; or letter to the 
Commissioner of Social Security, P.O. Box 17703, Baltimore, MD 21235-
7703. You may also deliver them to the Office of Regulations, Social 
Security Administration, 107 Altmeyer Building, 6401 Security 
Boulevard, Baltimore, MD 21235-6401, between 8 a.m. and 4:30 p.m. on 
regular business days. Comments are posted on the Federal eRulemaking 
Portal, or you may inspect them on regular business days by making 
arrangements with the contact person shown in this preamble.

FOR FURTHER INFORMATION CONTACT: Marg Handel, Supervisory Social 
Insurance Specialist, Office of Income Security Programs, Social 
Security Administration, 239 Altmeyer Building, 6401 Security 
Boulevard, Baltimore, MD 21235-6401, (410) 965-4639 or TTY (410) 966-
5609. For information on eligibility or filing for benefits, call our 
national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or 
visit our Internet site, Social Security Online, at https://
www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Electronic Version

    The electronic file of this document is available on the date of 
publication in the Federal Register at https://www.gpoaccess.gov/fr/
index.html.

Background

    Sections 206(a) and 1631(d) of the Social Security Act (Act) direct 
the Commissioner of Social Security

[[Page 16721]]

(Commissioner) to determine the maximum fees representatives may charge 
claimants for services that they perform in claims before the Social 
Security Administration (SSA) under title II or title XVI of the Act. 
For claims under title II in which the claimant is found entitled to 
past-due benefits, section 206 of the Act further authorizes the 
Commissioner to pay attorneys' fees, approved by the Commissioner or by 
a Federal court, out of a portion of the past-due benefits in the case. 
Prior to enactment of the SSPA (Pub. L. 108-203), we were not 
authorized to withhold and pay fees approved for attorneys in title XVI 
cases or for non-attorney representatives in cases under either title 
of the Act.

Direct Payment of Attorneys' Fees in Title XVI

    Section 302 of the SSPA amended section 1631(d)(2) of the Act to 
extend the attorney fee withholding and direct payment procedures to 
claims under title XVI of the Act. The amendments made by section 302 
apply with respect to attorney fees that were first required to be paid 
from title XVI past-due benefits on or after February 28, 2005, and we 
began paying fees directly to attorneys in cases effectuated on or 
after that date. Section 302 includes a sunset provision. Under that 
provision, the amendments made by section 302 will not apply to claims 
for benefits with respect to which the claimant and the representative 
enter into the agreement for representation after February 28, 2010.

Direct Payment of Fees to Eligible Non-Attorney Representatives

    Section 303 of the SSPA directs the Commissioner to carry out a 5-
year nationwide demonstration project to determine the potential 
results of extending the fee withholding and direct payment procedures 
that apply to attorneys under titles II and XVI of the Act, to non-
attorney representatives who meet certain minimum prerequisites 
specified in section 303 and any additional prerequisites that the 
Commissioner may prescribe. Under the prerequisites specified in 
section 303, individuals applying to participate in the demonstration 
project must have a bachelor's degree or equivalent education, possess 
liability insurance or equivalent insurance adequate to protect 
claimants in the event of malpractice by the representative, pass a 
criminal background check ensuring fitness to practice before SSA, pass 
an examination testing knowledge of the relevant provisions of the Act 
and the most recent developments in Agency and court decisions, and 
demonstrate ongoing completion of qualified continuing education 
courses. In addition, the Commissioner has required that individuals 
applying to participate in the demonstration project show that they 
have sufficient prior experience representing claimants before SSA. 
More detailed information about these prerequisites may be found in the 
Federal Register notices published at the start of the demonstration 
project in 2005 (70 FR 2447, January 13, 2005; 70 FR 14490, March 22, 
2005; and 70 FR 41250, July 18, 2005).
    The 5-year demonstration project on direct payment of fees to 
eligible non-attorneys under section 303 of the SSPA commenced on 
February 28, 2005. We began making direct payment to non-attorneys 
under the demonstration project on July 28, 2005, the date on which we 
determined that the initial group of applicants had satisfied the 
prerequisites for participation in the project. The demonstration 
project established by SSPA section 303 applies to claims for benefits 
with respect to which the agreement for representation is entered into 
after February 27, 2005, and before March 1, 2010. In these interim 
final rules, we are amending our regulations to reflect the fact that 
non-attorney representatives participating in the demonstration project 
may have their approved fees withheld from their clients' past-due 
benefits and paid directly to them.

Definition of ``Past-Due Benefits''

    The amount of ``past-due benefits'' is important in calculating the 
fees of representatives and in determining the maximum amount we can 
pay directly for representation. Since we last defined the term ``past-
due benefits'' in our regulations, there have been several legislative 
enactments that affect the definition of past-due benefits. In section 
5106 of the OBRA (Pub. L. 101-508), section 321(f) of the SSIPIA (Pub. 
L. 103-296), and section 302 of the SSPA, the Act was amended to 
exclude from past-due benefits any continued benefits paid pursuant to 
Sec.  404.1597a of part 404, any interim benefits paid pursuant to 
section 223(h) of the Act, any continued benefits paid pursuant to 
Sec.  416.996 of part 416, any continued benefits paid pursuant to 
Sec.  416.1336(b) of part 416, and any interim benefits paid pursuant 
to section 1631(a)(8) of the Act; to specify how a reduction under 
section 1127 of the Act (for receipt of benefits for the same period 
under both title II and title XVI) affects the past-due benefit 
computation; and to address the effect of interim assistance 
reimbursement payments. We are amending our regulations to reflect 
these statutory changes.

Assessment on Direct Payment of Fees

    Section 406 of the TWWIIA (Pub. L. 106-170) amended section 206 of 
the Act by adding section 206(d), which imposed an assessment on 
attorneys for the services we provide in determining and paying fees 
directly to attorneys from the benefits due claimants under title II of 
the Act. When that provision took effect on February 1, 2000, the 
amount of the assessment was 6.3 percent of the direct payment amount, 
with a provision allowing the Commissioner to determine for future 
years the percentage (not to exceed 6.3 percent) necessary to achieve 
full recovery of the costs of determining and paying fees to attorneys. 
Effective September 1, 2004, section 301 of the SSPA revised section 
206(d) to cap the assessment at the lesser of the amount calculated 
using the percentage rate determined by the Commissioner or $75, and to 
provide for annual adjustment of the $75 cap based on the cost-of-
living computation in section 215(i)(2)(A)(ii) of the Act. Sections 302 
and 303 of the SSPA extended this assessment to the direct payment of 
fees to attorneys under title XVI and to the direct payment of fees to 
non-attorney representatives participating in the demonstration project 
authorized by section 303.

Explanation of Changes

    We are amending our regulations on representation in 20 CFR parts 
404 and 416 to reflect the legislative changes to sections 206, 1127 
and 1631(d) of the Act that were enacted under section 5106 of OBRA, 
section 321(f) of the SSIPIA, section 406 of the TWWIIA, and sections 
301 and 302 of the SSPA. In addition, we are revising the regulations 
to reflect the provisions of section 303 of the SSPA. We are making 
only those substantive changes necessary to conform our regulations to 
these currently applicable statutory provisions. In these changes we 
are:
     Amending Sec.  404.1703 to revise the definition of 
``past-due benefits'' to explain that we determine past-due benefits 
before any applicable reduction for receipt of benefits for the same 
period under title XVI and that past-due benefits do not include 
continued payment of disability benefits during appeal or interim 
benefits in cases of delayed final decision.
     Adding to Sec.  416.1503 the definition of ``past-due 
benefits'' for title XVI benefits to explain that when we determine the 
amount of past-due

[[Page 16722]]

benefits, we subtract the amount of any reduction under section 1127 
for the concurrent receipt of benefits for the same period under both 
title II and title XVI, regardless of whether the actual reduction was 
applied to the title II benefits or to the title XVI benefits, and that 
past-due benefits do not include continued benefits or interim 
benefits.
     Adding new Sec. Sec.  404.1717 and 416.1517 to reflect the 
demonstration project extending benefit withholding and direct fee 
payment to non-attorneys under title II and title XVI. These sections 
also define ``eligible to participate in the direct payment 
demonstration project'' and describe the claims to which the 
demonstration project applies.
     Amending Sec.  404.1720 to revise paragraph (b)(4) to 
provide that we make direct fee payments from title II past-due 
benefits both to attorneys and to non-attorney representatives eligible 
to participate in the direct payment demonstration project, and that we 
assume no responsibility for the payment of any fee that we have 
authorized to a non-attorney if the representative is not eligible to 
participate in the demonstration project. We are also revising 
paragraph (c)(3) to provide that our notice of a fee determination will 
state whether we are responsible for paying the representative's fee 
from past-due benefits.
     Amending Sec.  416.1520 to add a new paragraph (b)(4) 
stating that we make direct payment of fees from past-due benefits 
under title XVI to attorneys and to non-attorneys eligible to 
participate in the direct payment demonstration project, and that we 
assume no responsibility for the payment of any fee that we have 
authorized to a non-attorney if the representative is not eligible to 
participate in the demonstration project. We are revising paragraph 
(c)(3) to state that our notice of fee determination will state whether 
we are responsible for paying the fee, rather than that we are not 
responsible for paying the fee. We are also revising paragraph (d)(3) 
to state that we assume no responsibility for fee payment based on a 
revised determination if the representative does not file the request 
for administrative review timely.
     Revising Sec.  416.1528 to place the existing text in a 
newly designated paragraph (a) having the heading, ``Representation of 
a party in court proceedings'' and to add a new paragraph (b) that has 
the heading ``Attorney fee allowed by a Federal court.'' Paragraph (b) 
states that the court may allow a reasonable fee to an attorney as part 
of its favorable judgment in a proceeding under title XVI of the Act 
and that we may pay the attorney the amount of the fee out of, but not 
in addition to, the amount of the past-due benefits payable to the 
claimant by reason of the court judgment.
     Amending Sec.  404.1730 to insert a previously omitted 
``the'' in paragraph (a), to add a cross-reference to the definition of 
``past-due benefits'' in Sec.  404.1703, and to reflect in paragraphs 
(b) and (c) the extension of the direct payment of fees from past-due 
benefits under title II to non-attorneys eligible to participate in the 
direct payment demonstration project. We are also adding a new 
paragraph (d) to reflect that we impose an assessment on the 
representative when we pay a fee directly to the representative; to 
explain how we calculate the assessment; and to state that the 
representative may not, directly or indirectly, request or otherwise 
obtain reimbursement of the amount of the assessment from the claimant.
     Adding new Sec.  416.1530 to state that direct payment of 
fees under title XVI extends to attorneys for fees we authorize and for 
fees a Federal court allows, and extends to non-attorneys eligible to 
participate in the direct payment demonstration project for fees we 
authorize. This section also describes the maximum amount we will pay 
to the representative; shows that we impose an assessment on the 
representative when we pay a fee directly to the representative; 
explains how we calculate the assessment; and states that the 
representative may not, directly or indirectly, request or otherwise 
obtain reimbursement of the amount of the assessment from the claimant.
    In addition to these substantive changes, we are revising 
Sec. Sec.  404.1720(b)(4) and 404.1730(a), (b), and (c) to refer to the 
person claiming a right under the old-age, disability, dependents', or 
survivors' benefits program in the second person, and thus make the 
language in these sections consistent with the use of the second person 
throughout the regulations.

Regulatory Procedures

    Pursuant to sections 205(a), 702(a)(5) and 1631(d)(1) of the Act, 
42 U.S.C. 405(a), 902(a)(5) and 1383(d)(1), we follow the 
Administrative Procedure Act (APA) rulemaking procedures specified in 5 
U.S.C. 553 in the development of our regulations. The APA provides 
exceptions to its prior notice and public comment procedures when an 
agency finds there is good cause for dispensing with such procedures on 
the basis that they are impracticable, unnecessary, or contrary to the 
public interest.
    In the case of these rules, we believe that, under 5 U.S.C. 
553(b)(B), good cause exists for issuing these regulatory changes as 
interim final rules, without prior public comment. In these rules, we 
are merely revising our existing regulations on representation of 
parties to reflect statutory changes made by section 5106 of OBRA, 
section 321(f) of the SSIPIA, section 406 of the TWWIIA, and sections 
301, 302 and 303 of the SSPA. Our intent is to conform our regulations 
to the changes enacted in those statutes, all of which are already in 
effect and all of which we have already implemented. We also have no 
discretion not to apply these statutory enactments. Therefore, we 
believe opportunity for prior public comment is unnecessary, and we are 
issuing these regulations as interim final rules. However, we recognize 
that the statutory provisions reflected in these rules are of 
considerable importance to those who are affected by them. We also are 
considering the possibility that some affected individuals may disagree 
with our interpretation of the numerous statutory provisions reflected 
in these interim final rules. Therefore, we are inviting public comment 
on the changes made by these interim final rules, and will consider any 
responsive comments received within 60 days of the publication of these 
interim final rules.
    In addition, we find good cause for dispensing with the 30-day 
delay in the effective date of a substantive rule, provided for by 5 
U.S.C. 553(d). As explained above, we are revising our title II and 
title XVI rules on representation of parties to reflect legislative 
provisions that are already in effect, and that we have been applying 
since they became effective. Without these changes, our rules will not 
reflect current law or our operating policy and procedures, and thus 
may mislead the public. Therefore, we find that it is in the public 
interest to make these rules effective upon publication.

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these interim final rules meet the criteria for a 
significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, they were subject to OMB review. We 
have also determined that these rules meet the plain language 
requirement of Executive Order 12866, as amended by Executive Order 
13258.

[[Page 16723]]

Regulatory Flexibility Act

    We certify that these final regulations will not have a significant 
economic impact on a substantial number of small entities. Also, these 
final regulations simply reflect legislation already in effect. 
Therefore, a regulatory flexibility analysis as provided in the 
Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

    These rules contain reporting requirements at Sec. Sec.  404.1717, 
404.1730(c)(1), 404.1730(c)(2)(i), 404.1730(c)(2)(ii), 416.1528(a), 
416.1530(c)(1), 416.1530(c)(2)(i), and 416.1530(c)(2)(ii). Following is 
a chart describing the burdens posed by these regulation sections. Most 
of the Information Collections contained in this rule have been cleared 
under pre-existing OMB control numbers 0960-0699 (Non-Attorney 
Representative Demonstration Project), 0960-0737 (Continuing Education 
Information Collection under Non-Attorney Demonstration Project), and 
0960-0104 (SSA-1560-U4, the Petition to Obtain Approval of a Fee for 
Representing a Claimant before the Social Security Administration). The 
1-hour placeholder burden figures in the chart indicate that the 
burdens for these sections were already cleared by OMB in ICRs 
submitted prior to the publication of these interim final rules. For 
the sections not covered by existing Information Collections, we have 
provided specific burden information.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Average
                                           Description of public         Number of     Frequency of     burden per
          Regulation section               reporting requirement        respondents      response        response      Estimated annual  burden  (hours)
                                                                                                         (minutes)
--------------------------------------------------------------------------------------------------------------------------------------------------------
404.1717.............................  To establish eligibility to    ..............  ..............  ..............  1 hour (placeholder burden).
                                        participate in the
                                        demonstration project.
404.1730(c)(1).......................  To receive direct payment of   ..............  ..............  ..............  1 hour (placeholder burden).
                                        fees from beneficiaries'
                                        past-due benefits, their
                                        representatives must file a
                                        request for approval of a
                                        fee, or written notice of
                                        intent to file a request, at
                                        an SSA office within 60 days
                                        of the date a favorable
                                        determination notice is
                                        mailed.
404.1730(c)(2)(i)....................  If representatives do not                 841              10              30  4,205
                                        file a request within 60
                                        days, they will receive a
                                        notice telling them to do so
                                        within 20 days of the notice
                                        date.
404.1730(c)(2)(ii)...................  Representatives must send                 600               1               3  30
                                        beneficiaries copies of time
                                        extension requests they made
                                        to SSA.
416.1517.............................  Same as for 404.1717, except   ..............  ..............  ..............  1 hour (placeholder burden).
                                        this section applies to
                                        Title XVI beneficiaries.
416.1528(a)..........................  If representatives have        ..............  ..............  ..............  1 hour (placeholder burden).
                                        provided the beneficiary
                                        services relating to
                                        dealings with SSA, they must
                                        specify what portion of the
                                        fee they want to charge for
                                        those services;
                                        representatives must file
                                        the request for charging
                                        fees.
416.1530(c)(1).......................  Same as for 404.1730(c)(1),                 1               1               1  1 hour (placeholder burden).
                                        except this section applies
                                        to Title XVI beneficiaries.
416.1530(c)(2)(i)....................  Same as for                               561              10              30  2,805
                                        404.1730(c)(2)(i), except
                                        this section applies to
                                        Title XVI beneficiaries.
416.1530(c)(2)(ii)...................  Same as for                               400               1               3  20
                                        404.1730(c)(2)(ii), except
                                        this section applies to
                                        Title XVI beneficiaries.
                                      ------------------------------------------------------------------------------------------------------------------
    Totals...........................  N/A..........................           2,402  ..............  ..............  7,065
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Information Collection Requests have been submitted to OMB for 
those information collections that require revisions as a result of 
this rule. While these rules will be effective upon publication, these 
burdens will not be effective until cleared by OMB. We will publish a 
notice in the Federal Register upon OMB approval of the information 
collection requirement(s).
    Not all Information Collections will be revised as a result of this 
rule. Nevertheless, we are soliciting comments on the burden estimate; 
the need for the information; its practical utility; ways to enhance 
its quality, utility, and clarity; and on ways to minimize the burden 
on respondents, including the use of automated collection techniques or 
other forms of information technology. Comments should be faxed or e-
mailed to the OMB desk officer for SSA at the following fax number or 
e-mail address: Office of Management and Budget, Attn: Desk Officer for 
SSA, Fax Number: 202-395-6974, E-mail address: OIRA--
Submission@omb.eop.gov.
    A comment is best assured of having its full effect if OMB receives 
it within 30 days of publication of this proposed rule.
    To receive a copy of the OMB clearance package, you may call the 
SSA Reports Clearance Officer at 410-965-0454 or e-mail at 
OPLM.RCO@ssa.gov.
(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security-Disability Insurance; 96.002, Social Security-Retirement 
Insurance; 96.004, Social Security-Survivors Insurance; and 96.006, 
Supplemental Security Income)

List of Subjects

20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors, and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security.

[[Page 16724]]

20 CFR Part 416

    Administrative practice and procedure, Aged, Blind, Disability 
benefits, Public assistance programs, Reporting and recordkeeping 
requirements, Supplemental Security Income.

    Dated: December 1, 2006.
Jo Anne B. Barnhart,
Commissioner of Social Security.
    For the reasons set out in the preamble, we are amending subpart R 
of part 404 and subpart O of part 416 of chapter III of title 20 of the 
Code of Federal Regulations as set forth below:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILTIY INSURANCE 
(1950-)

Subpart R--[Amended]

0
1. Revise the authority citation for subpart R of part 404 to read as 
follows:

    Authority: Secs. 205(a), 206, 702(a)(5), and 1127 of the Social 
Security Act (42 U.S.C. 405(a), 406, 902(a)(5), and 1320a-6); sec. 
303, Pub. L. 108-203, 118 Stat. 493.


0
2. Amend Sec.  404.1703 by revising the definition of ``past-due 
benefits'' to read as follows:


Sec.  404.1703  Definitions.

* * * * *
    Past-due benefits means the total amount of benefits under title II 
of the Act that has accumulated to all beneficiaries because of a 
favorable administrative or judicial determination or decision, up to 
but not including the month the determination or decision is made. For 
purposes of calculating fees for representation, we determine past-due 
benefits before any applicable reduction under section 1127 of the Act 
(for receipt of benefits for the same period under title XVI). Past-due 
benefits do not include:
    (1) Continued benefits paid pursuant to Sec.  404.1597a of this 
part; or
    (2) Interim benefits paid pursuant to section 223(h) of the Act.
* * * * *

0
3. Add Sec.  404.1717 to read as follows:


Sec.  404.1717  Demonstration project on direct payment of fees to non-
attorneys.

    (a) Section 303 of the Social Security Protection Act of 2004 
(SSPA), Public Law 108-203, requires the Commissioner of Social 
Security (Commissioner) to develop and implement a 5-year nationwide 
demonstration project that extends attorney fee withholding and direct 
payment procedures to any non-attorney representative who meets minimum 
prerequisites for participating in the project specified in section 303 
of the SSPA and any additional prerequisites prescribed by the 
Commissioner. The objective of the demonstration project is to 
determine the effect of extending to certain non-attorneys the fee 
withholding and direct payment procedures that apply to attorneys. A 
final report on the results of the demonstration project is to be 
completed and transmitted to Congress within 90 days of the project 
termination date, February 28, 2010.
    (b) As used in this subpart, the term ``eligible to participate in 
the direct payment demonstration project'' refers to the status of a 
non-attorney who we have determined meets the prerequisites for 
participation in the demonstration project.
    (c) The provisions of section 303 authorizing the direct payment of 
fees to non-attorneys and the withholding of title II benefits for that 
purpose apply in claims for benefits with respect to which the 
agreement for representation is entered into after February 27, 2005, 
and before March 1, 2010.

0
4. Amend Sec.  404.1720 by revising paragraphs (b)(4) and (c)(3) to 
read as follows:


Sec.  404.1720  Fee for a representative's services.

* * * * *
    (b) * * *
    (4) If your representative is an attorney, or a non-attorney who is 
eligible to participate in the direct payment demonstration project, as 
defined in Sec.  404.1717, and you are entitled to past-due benefits, 
as defined in Sec.  404.1703, we will pay the authorized fee, or a part 
of the authorized fee, directly to the representative out of the past-
due benefits, subject to the limitations described in Sec.  
404.1730(b)(1). If the representative is a non-attorney who is not 
eligible to participate in the direct payment demonstration project, we 
assume no responsibility for the payment of any fee that we have 
authorized.
    (c) * * *
    (3) Whether we are responsible for paying the fee from past-due 
benefits; and
* * * * *


0
5. Revise Sec.  404.1730 to read as follows:


Sec.  404.1730  Payment of fees.

    (a) Fees allowed by a Federal court. We will pay a representative 
who is an attorney, out of your past-due benefits, as defined in Sec.  
404.1703, the amount of the fee allowed by a Federal court in a 
proceeding under title II of the Act. The payment we make to the 
attorney is subject to the limitations described in paragraph (b)(1) of 
this section.
    (b) Fees we may authorize--(1) Attorneys and non-attorneys eligible 
to participate in the direct payment demonstration project. Except as 
provided in paragraph (c) of this section, if we make a determination 
or decision in your favor and you were represented by an attorney or a 
non-attorney who is eligible to participate in the direct payment 
demonstration project, as defined in Sec.  404.1717, and as a result of 
the determination or decision you have past-due benefits, as defined in 
Sec.  404.1703, we will pay the representative out of the past-due 
benefits, the smaller of the amounts in paragraph (b)(1)(i) or (ii) of 
this section, less the amount of the assessment described in paragraph 
(d) of this section.
    (i) Twenty-five percent of the total of the past-due benefits; or
    (ii) The amount of the fee that we set.
    (2) Non-attorneys not eligible to participate in the direct payment 
demonstration project. If the representative is a non-attorney who is 
not eligible to participate in the direct payment demonstration 
project, we assume no responsibility for the payment of any fee that we 
have authorized. We will not deduct the fee from your past-due 
benefits.
    (c) Time limit for filing request for approval of fee in order to 
obtain direct payment. (1) In order to receive direct payment of a fee 
from your past-due benefits, a representative who is either an attorney 
or a non-attorney who is eligible to participate in the direct payment 
demonstration project should file a request for approval of a fee, or 
written notice of the intent to file a request, at one of our offices 
within 60 days of the date the notice of the favorable determination is 
mailed.
    (2)(i) If no request is filed within 60 days of the date the notice 
of the favorable determination is mailed, we will mail a written notice 
to you and your representative at your last known addresses. The notice 
will inform you and the representative that unless the representative 
files, within 20 days from the date of the notice, a written request 
for approval of a fee under Sec.  404.1725, or a written request for an 
extension of time, we will pay all the past-due benefits to you.
    (ii) The representative must send you a copy of any request made to 
us for an extension of time. If the request is not filed within 20 days 
of the date of the notice, or by the last day of any extension we 
approved, we will pay all

[[Page 16725]]

past-due benefits to you. We must approve any fee the representative 
charges after that time, but the collection of any approved fee is a 
matter between you and the representative.
    (d) Assessment when we pay a fee directly to a representative. (1) 
Whenever we pay a fee directly to a representative from past-due 
benefits, we impose an assessment on the representative.
    (2) The amount of the assessment is equal to the lesser of:
    (i) The product we obtain by multiplying the amount of the fee we 
are paying to the representative by the percentage rate the 
Commissioner of Social Security determines is necessary to achieve full 
recovery of the costs of determining and paying fees directly to 
representatives, but not in excess of 6.3 percent; and
    (ii) The maximum assessment amount. The maximum assessment amount 
was initially set at $75, but by law is adjusted annually to reflect 
the increase in the cost of living. (See Sec. Sec.  404.270 through 
404.277 for an explanation of how the cost-of-living adjustment is 
computed.) If the adjusted amount is not a multiple of $1, we round 
down the amount to the next lower $1, but the amount will not be less 
than $75. We will announce any increase in the maximum assessment 
amount and explain how the increase was determined in the Federal 
Register.
    (3) We collect the assessment by subtracting it from the amount of 
the fee to be paid to the representative. The representative who is 
subject to an assessment may not, directly or indirectly, request or 
otherwise obtain reimbursement of the assessment from you.

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
DISABLED

Subpart O--[Amended]

0
6. Revise the authority citation for subpart O of part 416 to read as 
follows:

    Authority: Secs. 702(a)(5), 1127 and 1631(d) of the Social 
Security Act (42 U.S.C. 902(a)(5), 1320a-6 and 1383(d)); sec. 303, 
Pub. L. 108-203, 118 Stat. 493.

0
7. Amend Sec.  416.1503 by adding a new definition, in alphabetical 
order, to read as follows:


Sec.  416.1503  Definitions.

* * * * *
    Past-due benefits means the total amount of payments under title 
XVI of the Act, the Supplemental Security Income (SSI) program, 
including any Federally administered State payments, that has 
accumulated to you and your spouse because of a favorable 
administrative or judicial determination or decision, up to but not 
including the month the determination or decision is made. For purposes 
of calculating fees for representation, we first determine the SSI 
past-due benefits before any applicable reduction for reimbursement to 
a State (or political subdivision) for interim assistance 
reimbursement, and before any applicable reduction under section 1127 
of the Act (for receipt of benefits for the same period under title 
II). We then reduce that figure by the amount of any reduction of title 
II or title XVI benefits that was required by section 1127. We do this 
whether the actual offset, as provided under section 1127, reduced the 
title II or title XVI benefits. Past-due benefits do not include:
    (1) Continued benefits paid pursuant to Sec.  416.996 of this part;
    (2) Continued benefits paid pursuant to Sec.  416.1336(b) of this 
part; or
    (3) Interim benefits paid pursuant to section 1631(a)(8) of the 
Act.
* * * * *

0
8. Add Sec.  416.1517 to read as follows:


Sec.  416.1517  Demonstration project on direct payment of fees to non-
attorneys.

    (a) Section 303 of the Social Security Protection Act of 2004 
(SSPA), Public Law 108-203, requires the Commissioner of Social 
Security (Commissioner) to develop and implement a 5-year nationwide 
demonstration project that extends attorney fee withholding and direct 
payment procedures to any non-attorney representative who meets minimum 
prerequisites for participating in the project specified in section 303 
of the SSPA and any additional prerequisites prescribed by the 
Commissioner. The objective of this demonstration project is to 
determine the effect of extending to certain non-attorneys the fee 
withholding and direct payment procedures that apply to attorneys. A 
final report on the results of the demonstration project is to be 
completed and transmitted to Congress within 90 days of the project 
termination date, February 28, 2010.
    (b) As used in this subpart, the term ``eligible to participate in 
the direct payment demonstration project'' refers to the status of a 
non-attorney who we have determined meets the prerequisites for 
participation in the demonstration project.
    (c) The provisions of section 303 authorizing the direct payment of 
fees to non-attorneys and the withholding of title XVI benefits for 
that purpose apply in claims for benefits with respect to which the 
agreement for representation is entered into after February 27, 2005, 
and before March 1, 2010.

0
9. Amend Sec.  416.1520 by adding paragraph (b)(4) and revising 
paragraphs (c)(3) and (d)(3) to read as follows:


Sec.  416.1520  Fee for a representative's services.

* * * * *
    (b) * * *
    (4) If your representative is an attorney, or a non-attorney who is 
eligible to participate in the direct payment demonstration project, as 
defined in Sec.  416.1517, and you are entitled to past-due benefits, 
as defined in Sec.  416.1503, we will pay the authorized fee, or a part 
of the authorized fee, directly to the representative out of the past-
due benefits, subject to the limitations described in Sec.  
416.1530(b)(1). If the representative is a non-attorney who is not 
eligible to participate in the direct payment demonstration project, we 
assume no responsibility for the payment of any fee that we have 
authorized.
    (c) * * *
    (3) Whether we are responsible for paying the fee from past-due 
benefits; and
* * * * *
    (d) * * *
    (3) Payment of fees. We assume no responsibility for the payment of 
a fee based on a revised determination if the request for 
administrative review was not filed on time.

0
10. Revise Sec.  416.1528 to read as follows:


Sec.  416.1528  Proceedings before a State or Federal court.

    (a) Representation of a party in court proceedings. We shall not 
consider any service the representative gave you in any proceeding 
before a State or Federal court to be services as a representative in 
dealings with us. However, if the representative also has given service 
to you in the same connection in any dealings with us, he or she must 
specify what, if any, portion of the fee he or she wants to charge is 
for services performed in dealings with us. If the representative 
charges any fee for those services, he or she must file the request and 
furnish all of the information required by Sec.  416.1525.
    (b) Attorney fee allowed by a Federal court. If a Federal court in 
any proceeding under title XVI of the Act makes a judgment in favor of 
the claimant who was represented before the court by an attorney, and 
the court, under section 1631(d)(2) of the Act,

[[Page 16726]]

allows to the attorney as part of its judgment a fee not in excess of 
25 percent of the total of past-due benefits to which the claimant is 
eligible by reason of the judgment, we may pay the attorney the amount 
of the fee out of, but not in addition to, the amount of the past-due 
benefits payable. We will not pay directly any other fee your 
representative may request.

0
11. Add Sec.  416.1530 to read as follows:


Sec.  416.1530  Payment of fees.

    (a) Fees allowed by a Federal court. Commencing February 28, 2005, 
we will pay a representative who is an attorney, out of your past-due 
benefits, as defined in Sec.  416.1503, the amount of the fee allowed 
by a Federal court in a proceeding under title XVI of the Act. The 
payment we make to the attorney is subject to the limitations described 
in paragraph (b)(1) of this section.
    (b) Fees we may authorize--(1) Attorneys and non-attorneys eligible 
to participate in the direct payment demonstration project. Except as 
provided in paragraphs (c) and (e) of this section, commencing February 
28, 2005, if we make a determination or decision in your favor and you 
were represented by an attorney or a non-attorney who is eligible to 
participate in the direct payment demonstration project, as defined in 
Sec.  416.1517, and as a result of the determination or decision you 
have past-due benefits, as defined in Sec.  416.1503, we will pay the 
representative out of the past-due benefits, the smallest of the 
amounts in paragraphs (b)(1)(i) through (iii) of this section, less the 
amount of the assessment described in paragraph (d) of this section.
    (i) Twenty-five percent of the total of the past-due benefits, as 
determined before any payment to a State (or political subdivision) to 
reimburse the State (or political subdivision) for interim assistance 
furnished you, as described in Sec.  416.525 of this part, and reduced 
by the amount of any reduction in benefits under this title or title II 
pursuant to section 1127 of the Act;
    (ii) The amount of past-due benefits remaining after we pay to a 
State (or political subdivision) an amount sufficient to reimburse the 
State (or political subdivision) for interim assistance furnished you, 
as described in Sec.  416.525 of this part, and after any applicable 
reductions under section 1127 of the Act; or
    (iii) The amount of the fee that we set.
    (2) Non-attorneys not eligible to participate in the direct payment 
demonstration project. If the representative is a non-attorney who is 
not eligible to participate in the direct payment demonstration 
project, we assume no responsibility for the payment of any fee that we 
have authorized. We will not deduct the fee from your past-due 
benefits.
    (c) Time limit for filing request for approval of fee in order to 
obtain direct payment. (1) In order to receive direct payment of a fee 
from your past-due benefits, a representative who is either an attorney 
or a non-attorney who is eligible to participate in the direct payment 
demonstration project should file a request for approval of a fee, or 
written notice of the intent to file a request, at one of our offices 
within 60 days of the date the notice of the favorable determination is 
mailed.
    (2)(i) If no request is filed within 60 days of the date the notice 
of the favorable determination is mailed, we will mail a written notice 
to you and your representative at your last known addresses. The notice 
will inform you and the representative that unless the representative 
files, within 20 days from the date of the notice, a written request 
for approval of a fee under Sec.  416.1525, or a written request for an 
extension of time, we will pay all the past-due benefits to you.
    (ii) The representative must send you a copy of any request made to 
us for an extension of time. If the request is not filed within 20 days 
of the date of the notice, or by the last day of any extension we 
approved, we will pay to you all past-due benefits remaining after we 
reimburse the State for any interim assistance you received. We must 
approve any fee the representative charges after that time, but the 
collection of any approved fee is a matter between you and the 
representative.
    (d) Assessment when we pay a fee directly to a representative. (1) 
Whenever we pay a fee directly to a representative from past-due 
benefits, we impose an assessment on the representative.
    (2) The amount of the assessment is equal to the lesser of:
    (i) The product we obtain by multiplying the amount of the fee we 
are paying to the representative by the percentage rate the 
Commissioner of Social Security determines is necessary to achieve full 
recovery of the costs of determining and paying fees directly to 
representatives, but not in excess of 6.3 percent; and
    (ii) The maximum assessment amount. The maximum assessment amount 
was initially set at $75, but by law is adjusted annually to reflect 
the increase in the cost of living. (See Sec. Sec.  404.270 through 
404.277 for an explanation of how the cost-of-living adjustment is 
computed.) If the adjusted amount is not a multiple of $1, we round 
down the amount to the next lower $1, but the amount will not be less 
than $75. We will announce any increase in the maximum assessment 
amount, and explain how that increase was determined in the Federal 
Register.
    (3) We collect the assessment by subtracting it from the amount of 
the fee to be paid to the representative. The representative who is 
subject to an assessment may not, directly or indirectly, request or 
otherwise obtain reimbursement of the assessment from you.
    (e) Effective dates for extension of direct payment of fee to 
attorneys. The provisions of this subpart authorizing the direct 
payment of fees to attorneys and the withholding of title XVI benefits 
for that purpose, apply in claims for benefits with respect to which 
the agreement for representation is entered into before March 1, 2010.

 [FR Doc. E7-6383 Filed 4-4-07; 8:45 am]
BILLING CODE 4191-02-P