Fee Reasonableness Reviews; Effect of Loss of Accreditation on Direct Payment, 85055-85064 [2024-24708]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 89, Number 207 (Friday, October 25, 2024)]
[Rules and Regulations]
[Pages 85055-85064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-24708]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 14

RIN 2900-AR93


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

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: 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.

DATES: 
    Effective date: This final rule is effective April 1, 2025.
    Applicability date: The provisions of this final rule shall apply 
to all fee allocation notices issued on or after the effective date of 
this final rule.

FOR FURTHER INFORMATION CONTACT: 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.)

SUPPLEMENTARY INFORMATION: On December 21, 2023, VA published in the 
Federal Register (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.

Comments on Representatives and Fees Generally

    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

[[Page 85056]]

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 any 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.

Comments on Unaccredited Companies and Upfront Fees

    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 Sec.  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 accredited agents and attorneys, not 
unaccredited actors, as confirmed by Sec.  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.

Comments on Declining Direct Payment for Agents or Attorneys Whose VA 
Accreditation Has Been Terminated

    One commenter expressed ``full support'' for VA's proposal to 
decline direct payment for agents or attorneys who have had their 
accreditation revoked (Sec.  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.

Comments on Current Fee Reasonableness Wait Times

    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 remained silent on the issue of fees--had represented the claimant 
six years prior.
    VA thanks these commenters. This rule has been designed to remedy 
this issue and reduce fee reasonableness wait times. With the 
institution of reasonable default allocation rules, there will be less 
cases in the queue for a fee reasonableness review; thus, those cases 
that warrant such review will receive a determination more promptly. 
The first commenter's situation is an apt example. Under this rule, if 
no party objects to the default allocation within 60 days, VA may 
immediately release the fee to the successor attorney at the firm (or 
split the fee, depending on which default allocation rule applies). See 
38 CFR 14.636(i)(1)-(2). Parties will no longer have to wait for a fee 
reasonableness review just because two attorneys represented the 
claimant. The fourth commenter's situation is also instructive. Even 
though another attorney provided representation six years prior, if no 
party objects within 60 days, the commenter could receive the entire 
fee shortly thereafter (assuming the Sec.  14.636(i)(1) default is 
applicable). Moreover, the efficiency gains under this rule could also 
free up OGC resources to implement business practices that better serve 
the parties during the fee reasonableness process. Because this rule 
remedies these

[[Page 85057]]

commenters' concerns, VA makes no change in response to the comments.
    The fourth commenter further stated that the increase in fee 
reasonableness case inventory was the result of VA's policy choice to 
refer all direct-pay multi-attorney or multi-agent matters for a fee 
reasonableness review without any opportunity for the parties to 
resolve the matter on their own. We do not dispute that VA's policy to 
refer to OGC all direct-pay multi-attorney/agent fee matters, in 
conjunction with the rising number of multi-attorney/agent matters, has 
been a factor for the increase. Because there was no rule setting forth 
default allocations, VA had to refer all these cases for a 
determination on how much to pay each agent or attorney. Now, however, 
as stated in the preamble to the proposed rule, VA believes that the 
best course forward is to establish default allocation rules, which 
will allow veterans and representatives the opportunity to resolve fee 
matters on their own in lieu of a fee reasonableness review. 88 FR at 
88,295. We believe this approach accords with the commenter's view. VA 
thanks the commenter and makes no change in response to the comment.

Comments on the Sec.  14.636(i)(1)(i) Default Allocation

    One commenter expressed support for the default allocation for 
cases involving a ``continuous'' agent or attorney, Sec.  
14.636(i)(1)(i), stating that such an allocation ``incentivizes ethical 
behavior and the high quality representation that our Veterans 
deserve.'' The commenter stated that there is an ``unethical (but sadly 
widespread) practice wherein a representative submits a few documents 
on behalf of a client, drops representation of that client, and then 
sits back and collects fees for the next 5-10 years based on the work 
done by subsequent representatives or by the Veteran on his [or her] 
own.'' According to the commenter, this default properly prioritizes 
``protecting honest Veterans from unscrupulous representatives'' and 
``encouraging ethical and responsible legal representation of 
Veterans'' over certain representatives' attempts ``to collect fees 
from awards granted to Veterans long after their representation ends.'' 
A second commenter, however, expressed concern with this default 
allocation, stating that a discharged agent or ``attorney can spend 
years developing evidence, submitting argument, consulting with and 
advising a client, and investing other resources on a case. . . . VA 
would entirely ignore all these services and simply award the fee to 
the `continuous' agent or attorney.''
    VA thanks both commenters for their comments. We agree with several 
of the points made by the first commenter. As to the second commenter's 
concern, we acknowledge that there are situations where the discharged 
\1\ agent or attorney performed more valuable services for the claim 
than the continuous agent or attorney; there are also situations where 
the continuous agent or attorney performed the more valuable services. 
Accordingly, we structured the default allocation to be nothing more 
than an initial baseline: If the discharged agent or attorney (or the 
claimant) disagrees with the default in a given case, the parties have 
a 60-day window to resolve the matter on their own--and, if an 
agreement cannot be reached, OGC reasonableness review is available.\2\ 
But the efficiency gain of a default is that--if no party has an issue 
with the continuous agent or attorney receiving the fee, or if the 
parties reach an agreement on their own as to how they will re-allocate 
the fee after its release--that is the end of the matter and OGC will 
not have to adjudicate a case that no party has asked it to resolve. 
Accordingly, VA makes no change in response to these comments.
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    \1\ Herein, ``discharged'' refers to representatives who were 
either discharged or withdrew from the representation prior to the 
award of benefits.
    \2\ As merely an initial baseline, the default has no effect 
once a party requests OGC review. 88 FR at 88,296.
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Comments on the Sec.  14.636(i)(1)(ii) Default Allocation

    One commenter expressed concern with the default allocation for 
cases where all agents and attorneys have been discharged, Sec.  
14.636(i)(1)(ii), stating that ``VA would treat both attorneys equally, 
even if the latter performed only minimal work.'' VA thanks the 
commenter for the comment, but, again, the default allocation is just 
an initial baseline; if any party believes the default split is not 
reasonable in a given case, the parties can work out on their own how 
to re-allocate the fee after receipt or (if that effort proves 
unsuccessful) request OGC review. The default is not there to assume 
that all cases with discharged agents or attorneys involve equal work 
by those agents or attorneys; it is there to provide a generally 
reasonable baseline that will be satisfactory to the parties in many 
circumstances and will enable OGC to focus its resources on those cases 
where a party has affirmatively expressed a desire for OGC review.
    Another commenter recalled a situation in which their client was 
``unknowingly solicited to sign a new [representation] agreement'' with 
another entity, such that they subsequently had to re-establish 
representation of the client. The commenter stated that, under this 
rule, the ``soliciting entity could have received an equal split'' or 
``I may have been boxed out of my fees,'' i.e., ``my years of work may 
have been thrown away or allocated out by default because a different 
or multiple representatives could have existed on decision day.'' VA 
thanks the commenter, but, to be clear, in this situation, so long as 
the representation is re-established prior to the date of the award of 
benefits (and is direct-pay eligible), the commenter would be allocated 
the entire fee under Sec.  14.636(i)(1)(i). If the representation is 
not re-established in time, the commenter would nevertheless receive 
the fee allocation notice and, if dissatisfied with a Sec.  
14.636(i)(1)(ii) split, could request OGC review to ensure receipt of a 
reasonable fee. Accordingly, this rule provides agents and attorneys in 
such circumstances a sufficient remedy.
    A third commenter stated opposition to a ``default fee split of any 
kind'' because it ``unlawfully impose[s] fee sharing'' and is unethical 
under ABA Formal Opinion 487. See ABA Comm. On Ethics & Prof'l 
Responsibility, Formal Op. 487 (2019). VA thanks the commenter, but 
Opinion 487 addresses a successor counsel's obligations to its client 
and prior counsel upon (and prior to) fee receipt; it does not address 
an agency's authorities or obligations under 38 U.S.C. 5904 in a multi-
agent or multi-attorney case. To be clear, we do not dispute the 
relevance of this opinion in terms of the ethical obligations of 
representatives. Indeed, in the preamble to its proposed rule, VA 
stated that, ``upon receipt of a fee allocation notice, the agent or 
attorney has a professional responsibility to review the default fee 
and ensure that it is not clearly unreasonable; if it is, that agent or 
attorney has an ethical obligation to return that fee to the 
claimant.'' 88 FR at 88,296. VA further emphasized that ``[t]he failure 
to return the fee to the claimant in such circumstances could 
constitute a violation of VA's standards of conduct warranting 
suspension or cancellation of the agent's or attorney's accreditation 
to represent claimants before VA.'' Id. So, we agree that the Model 
Rules of Professional Conduct and Opinion 487 are relevant to agent and 
attorney obligations under this rule, but we do not agree that either 
ethically precludes VA from implementing this rule. We also do not 
agree with the commenter's allegation that this rule imposes mandatory 
fee sharing; as

[[Page 85058]]

stated above, the default allocation is just an initial baseline, and 
if any agent or attorney believes they should not have to share a fee 
with another representative, they can simply file for OGC 
reasonableness review.
    Accordingly, VA makes no change in response to these comments.

Comments on Fee Reasonableness Data

    One commenter stated that the ``very small pool of data'' presented 
by VA in the preamble to the proposed rule (88 FR at 88,296) was 
insufficient to ``draw a sweeping conclusion that a client should 
automatically be part of the default allocation,'' when considering 
``the large number of fees awarded in a year that never are 
contested.'' Another commenter stated that different data--comparing 
the cases that returned some of the potential fee to the claimant with 
``the total number of cases where fees were generated, entitlement was 
established, and there was no referral or contest to OGC''--would be 
more relevant.
    VA appreciates these comments, but disagrees about what data is 
most relevant here. The purpose of the data presented in the preamble 
to the proposed rule was to explain why we included the claimant in the 
default allocation for cases where all agents or attorneys were 
discharged. 38 CFR 14.636(i)(1)(ii). We reviewed the data for OGC 
reviews in such cases (not just a sample, but the entire pool of such 
cases from fiscal year 2022 and the first three-quarters of fiscal year 
2023); the data reflected that--more often than not--OGC found it 
reasonable to return some of the potential fee to the claimant; and we 
concluded (for this reason and others, see 88 FR at 88,296) that a 
default that included the claimant in the allocation was a generally 
reasonable baseline for this type of case. Comparing this data to the 
total number of cases where OGC review was not provided is less 
relevant, because chronicling the number of cases where no entity 
decided reasonableness does not illuminate what a generally reasonable 
baseline for this type of case would or should be.\3\
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    \3\ We will take this opportunity to note that the data for the 
first three quarters of fiscal year 2023 (88 FR at 88,296) remained 
consistent through the last quarter. In total, of the 115 fee 
reasonableness decisions issued in fiscal year 2023 addressing the 
situation where all agents and attorneys had been discharged, OGC 
returned some of the potential fee to the claimant in 103 of those 
decisions (89%). Overall, $2.2 million was at stake in these 115 
cases, and OGC returned $1.52 million to claimants (69% of the 
amount at stake). This data further confirms that Sec.  
14.636(i)(1)(ii) provides a generally reasonable baseline for this 
type of case.
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    A third commenter stated that VA's data reflects that OGC should 
continue reviewing fee reasonableness for every multi-agent or multi-
attorney case. VA appreciates this comment, but the data presented was 
not addressing all multi-agent or multi-attorney cases; it was only 
addressing cases where all agents or attorneys had been discharged; and 
there is no basis for assuming that the data from this subset of cases 
is replicated for ``continuous'' agent or attorney matters, where 
fundamentally different factors are at play that generally result in 
the return of less money to claimants, including (1) the fact that the 
favorable decision awarding benefits was obtained during the 
representation and (2) the presumption that the continuous 
representative's fee is reasonable under Sec.  14.636(f)(1). In 
general, VA believes that OGC's time and resources should be primarily 
dedicated to protecting claimants from unreasonable fees and resolving 
disputes over fees, rather than sua sponte deciding a fee allocation 
between attorneys or agents at no benefit to a claimant (as occurs in 
many cases where the Sec.  14.636(f)(1) presumption of fee 
reasonableness applies).
    A fourth commenter suggested that additional data--regarding OGC's 
inventory, OGC's oldest pending cases, VA regional offices that refer 
cases to OGC, and the percentage of OGC's cases initiated by a party--
would be relevant. While VA does not have comprehensive data on all 
these issues, a review of OGC's incoming cases from the first quarter 
of fiscal year 2024 reflects that 77.5% of incoming cases were referred 
by the Veterans Benefits Administration, while 22.5% were the result of 
a party's request for review. Moreover, a sample of 138 OGC cases 
decided between March 2022 and January 2024 reflects that, on average, 
a decision on fee reasonableness was issued 2.9 years after VA's 
determination on fee eligibility. This data confirms that this rule's 
fundamental change--from automatic OGC review of direct-pay multi-agent 
or multi-attorney cases to party-initiated review \4\--is likely to 
have a significant effect on efficiency and to enable both 
representatives and veterans to receive their fees and benefits 
faster.\5\
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    \4\ Though OGC may still initiate its own review, Sec.  
14.636(i)(4), this rule was structured so that most of its reviews 
would be the product of party initiation.
    \5\ The above data (as well as the data provided in the preamble 
to the proposed rule) has been placed on the rulemaking docket, 
available at www.regulations.gov.
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    VA makes no change in response to these comments.

Comments on Allowing for Compromise Between the Parties

    One commenter expressed appreciation for ``the time and effort OGC 
exerted to propose a solution'' for expediting fee matters and agreed 
with VA that ``there are many fee matters that can be worked out 
between the parties'' (quoting 88 FR at 88,295). However, the commenter 
then opined that VA's proposal ``does not provide for such 
resolutions'' and suggested that ``parties should be permitted to 
submit a negotiated agreement.'' Another commenter stated that VA 
should ``create a process for attorneys and accredited agents'' to 
submit a ``consented arrangement.'' A third commenter suggested that 
``VA create a form in which attorneys and accredited agents clearly 
state the mutually requested allocation of the fee, waive the rights to 
appeal and to reasonableness review, and in which claimants could 
additionally opt to waive the 60-day due process period. Upon receipt 
of this form signed by all parties, VA would simply release payment 
according to the parties' mutual agreement.'' The commenter stated that 
this process would not ``overlook[ ] the possibility of a reasonable 
compromise [on fees] between accredited agents and attorneys.''
    VA thanks the commenters for these suggestions. But this final rule 
does allow for ``negotiated agreement[s]'' or ``consented 
arrangement[s],'' and does not overlook the possibility of compromise 
amongst the parties at issue. Indeed, VA has structured the default 
allocation rules so that the parties have a 60-day window to reach a 
compromise on their own. If a compromise is reached, there is no need 
to submit anything to VA: VA will release the fee in accord with the 
fee allocation notice and the parties can simply re-allocate the fee on 
their own in accord with the compromise reached. Thus, this final rule 
achieves the same aims as the commenters' proposals.
    Moreover, while achieving the same aims, the final rule is 
preferable to the commenters' proposals. The commenters' proposals 
would require OGC review whenever an agreement is not submitted; this 
final rule would require OGC review whenever a request for 
reasonableness review is submitted. That difference between ``opt-in'' 
and ``opt-out'' will have a significant effect on the queue for OGC 
reasonableness reviews and the time that attorneys, agents, and 
claimants must wait to receive their earned fees and benefits. The 
final rule is preferable on that front.

[[Page 85059]]

    Finally, to the extent the commenters are seeking an avenue to 
waive the 60-day period, it is unclear that the benefit of such an 
avenue (fee release days or weeks earlier) outweighs the burden of 
carefully reviewing such a waiver to ensure that claimants have 
knowingly and voluntarily waived their appellate rights (to both OGC 
and Board review). We do not outright reject the idea, but think it is 
best to implement this final rule and then reassess. The final rule as 
it stands will, in many cases, reduce the time for fee receipt from 2.9 
years on average (see data noted above) to approximately 60 days.
    Accordingly, VA makes no change in response to these comments.

Comments on Consequences of This Rule

    One commenter stated that this rule could add to OGC's inventory of 
fee reasonableness cases, because discharged agents or attorneys who 
worked on a case for years will not be satisfied with the provision of 
fees to a continuous agent or attorney under Sec.  14.636(i)(1)(i), or 
with a split fee under Sec.  14.636(i)(1)(ii), and will therefore 
request OGC review. Another commenter similarly predicted ``more 
reasonableness reviews/appeals'' under this rule.
    VA appreciates the comments, but disagrees that OGC will have a 
higher inventory under this rule. Currently, OGC reviews every direct-
pay case involving multiple agents or attorneys, whether the parties 
desire that review or not. Under this rule, OGC will generally limit 
its review to cases where a party requests it. That is a dramatic 
difference, as it could divert up to 77.5% of OGC's incoming caseload 
(per the data presented above). The situation laid out by the first 
commenter--discharged agents or attorneys who provided extensive 
services on a case for years--may be the most common circumstance where 
(the parties have difficulty reaching a compromise and) OGC review is 
desired, but there are many situations (e.g., all representatives are 
from the same law firm; all representatives reach an agreement to re-
allocate fees upon release; all representatives are fine with the 
default allocation) where OGC review will no longer be needed under 
this rule. This efficiency gain will enable both representatives and 
veterans to receive their fees and benefits faster.
    The first commenter further stated that this rule could incentivize 
claimants ``to terminate representation when they anticipate a 
favorable decision,'' and could disincentivize agents and attorneys 
from representing claimants with prior agent or attorney 
representation. The second commenter echoed the concern about a 
potential disincentive here. VA appreciates the comments, but sees no 
basis for such speculation. First, the prospect that a claimant could 
be so confident that a favorable decision is forthcoming, so 
knowledgeable about Sec.  14.636(i)(1)(ii), and so manipulative as to 
terminate representation to take advantage of that provision, is 
extremely unlikely. This assessment is confirmed by another commenter, 
who stated that ``the vast majority of the thousands of clients we've 
successfully represented before VA have been proven to be extremely 
honest and would never even think to purposely drop us as their legal 
representative in order to avoid having to pay our legal fee.'' In any 
event, even in that extremely unlikely case of claimant manipulation, 
the attorney or agent at issue could simply file for OGC review to 
ensure receipt of a reasonable fee for the case. Second, even if VA 
decided not to enact this rule, that same ``incentive to terminate'' 
would still exist, because terminating a representative before a 
decision renders the presumption of fee reasonableness inapplicable. 
Compare 38 CFR 14.636(f)(1) with 38 CFR 14.636(f)(2). So this rule 
presents no meaningful incentive change for claimants.
    The same logic applies to the concern that agents and attorneys 
will not represent claimants with prior agent or attorney 
representation. Even if VA decided not to enact this rule, that same 
``disincentive'' already exists under current practice, because all 
direct-pay cases involving multiple agents or attorneys are currently 
referred to OGC for allocation of the fee. So, either way, agents and 
attorneys know that the fee in the case will have to account for the 
prior agent or attorney. If anything, when compared to current 
practice, the rule change promotes representation of claimants with 
prior agent or attorney representation, given the structure of the 
Sec.  14.636(i)(1)(i) default.
    Accordingly, VA makes no change in response to these comments.

Comments on Fee Eligibility and Reasonableness

    One commenter stated that VA's proposal unlawfully vests OGC with 
the authority to decide questions of fee eligibility in the first 
instance. Respectfully, that is a misunderstanding. Under this rule, 
Sec.  14.636(i)(1) is clear that ``the agency of original jurisdiction 
that issued the decision'' awarding past-due benefits--which is not 
OGC--``shall decide whether the agents or attorneys who filed direct-
pay fee agreements in the case are eligible for direct payment.'' 
Moreover, Sec.  14.636(i)(5) provides that OGC may address fee 
eligibility only ``if no other agency of original jurisdiction has made 
a determination on that issue.'' This language is substantively 
identical to VA's previous regulatory language on the matter. VA is not 
expanding, or attempting to expand, the scope of OGC's authority in 
this rulemaking.
    Another commenter stated that VA's proposal ``conflates'' the 
concepts of entitlement to a fee and reasonableness of a fee, because 
the default rules assume fee entitlement for all agents and attorneys. 
Again, with respect, that is a misunderstanding. Under this rule, Sec.  
14.636(i)(1) is clear that the agency of original jurisdiction that 
issued the decision awarding past-due benefits ``shall decide whether 
the agents or attorneys who filed direct-pay fee agreements in the case 
are eligible for direct payment''; Sec.  14.636(i)(1)(i) and (ii) also 
contain the ``eligible for direct payment'' caveat; and Sec.  
14.636(i)(2) provides that ``direct payment eligibility 
determination[s]'' are appealable to the Board. In sum, VA's rule does 
not assume fee eligibility or entitlement for all agents and 
attorneys--it requires an agency of original jurisdiction finding of 
eligibility before an attorney or agent is included in the default 
allocation.
    The same commenter asserted that VA's proposal ``creates a default 
on reasonableness that conflicts with'' 38 U.S.C. 5904(a)(5). VA 
appreciates the comment, but, in 2019, VA addressed the interplay 
between section 5904(a)(5) (``A fee that does not exceed 20 percent of 
the past due amount of benefits awarded on a claim shall be presumed 
reasonable.'') and the holding of Scates v. Principi, 282 F.3d 1362, 
1365-66 (Fed. Cir. 2002) (discharged attorneys are only entitled to a 
fee based on quantum meruit that reflects their contribution to and 
responsibility for the benefits awarded). 84 FR 138, 151 (2019). VA 
explained that the section 5904(a)(5) presumption applied to continuous 
agents or attorneys whose fee does not exceed 20 percent of the past-
due benefits awarded, while the Scates quantum meruit standard applied 
to discharged agents or attorneys. 84 FR at 151. VA incorporated that 
distinction in 38 CFR 14.636(f)(1)-(2). See also Cox v. McDonough, 34 
Vet. App. 112, 126 (2021) (confirming that, per Scates, the fee 
reasonableness presumption does not apply when attorney is discharged), 
aff'd, 2023 WL 1846117 (Fed. Cir. 2023).
    This rule merely continues that distinction. As VA explained in the

[[Page 85060]]

preamble to its proposed rule, the default allocation for cases 
involving a (direct pay eligible) ``continuous'' agent or attorney is 
logical because that individual's fee is presumed reasonable under 
Sec.  14.636(f)(1); and the default allocation for cases where all 
agents or attorneys have been discharged is logical because the 
reasonableness presumption does not apply to those individuals--quantum 
meruit does, under Scates and Sec.  14.636(f)(2). 88 FR at 88,296. So, 
to the extent the commenter discerns a conflict between this rule and 
section 5904(a)(5), any such conflict would be based in the holding of 
Scates and the distinction laid out at Sec.  14.636(f)(1)-(2), not the 
provisions being instituted here.
    A third commenter asserted that a default allocation that includes 
a claimant ``absent a concern raised by that individual is misplaced'' 
given the presumption of fee reasonableness. Again, however, the 
default allocation that includes a claimant (Sec.  14.636(i)(1)(ii)) is 
only applicable when the presumption of fee reasonableness does not 
apply and quantum meruit does. In a quantum meruit setting, where 
discharged attorneys or agents bear the burden of proving the value of 
their services, Dobbs v. DePuy Orthopedics, Inc., 842 F.3d 1045, 1050 
(7th Cir. 2016); Turpin v. Anderson, 957 S.W. 2d 421, 427 (Mo.App. 
1997), there is nothing improper about (1) having a default allocation 
that effectively proposes a quantum meruit fee amount and (2) requiring 
discharged attorneys or agents to (negotiate with the other parties or) 
file with OGC if they believe they have earned more.
    Accordingly, VA makes no change in response to these comments.

Comment on Non-Direct Pay Agreements

    One commenter suggested that VA's proposal may have contained a 
``simple oversight'' in not treating ``a current legal representative 
with a valid non-direct pay fee agreement'' as ``a continuous agent or 
attorney (meaning that there would be no presumption that they deserve 
their entire legal fee). . . .'' The commenter requested that VA pay no 
fee to discharged representatives if the claimant has a current legal 
representative with a valid non-direct pay fee agreement; 
alternatively, that VA institute a presumption that a discharged 
representative's fee agreement has ``no legal force'' if ``factors 
indicate that [the representative's] work was unsuccessful''; or, in 
the further alternative, that VA ``simply stop'' direct payment ``in 
all cases.''
    VA appreciates the comment, but declines these requests. At the 
outset, as a technical matter, those with non-direct pay agreements do 
meet the definition of ``continuous agent or attorney'' in Sec.  
14.636(i) as long as they provided representation that continued 
through the date of the decision awarding benefits. But they are not 
entitled to a ``presumption that they deserve their entire legal fee,'' 
which could be 30, 33, or even 50 percent of the claimant's past-due 
benefits. Indeed, in VA's experience non-direct pay agreements hardly 
ever qualify for the statutory presumption of reasonableness: A review 
of 206 non-direct pay fee agreements received by OGC between February 
15, 2023, and March 6, 2023, reflects that 204 of the agreements 
(99.03%) charged a fee over 20 percent of the past-due benefits awarded 
and therefore were ineligible for the presumption of reasonableness. 38 
U.S.C. 5904(a)(5). In contrast, direct pay agreements must charge a fee 
that does not exceed 20 percent of the past-due benefits awarded, 38 
U.S.C. 5904(d)(1), and therefore are all eligible for the presumption 
of reasonableness, 38 U.S.C. 5904(a)(5). Thus, direct pay and non-
direct pay agreements do not always warrant identical treatment, and 
particularly when it comes to the default allocation rules, which--only 
implicated ``[w]hen one or more direct-pay fee agreements has been 
filed''--are primarily designed to facilitate efficient direct payment. 
38 CFR 14.636(i)(1) (emphasis added).
    That said, as noted in the preamble to the proposed rule, the 
default allocation of Sec.  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 and may be personally 
responsible for paying those other agents or attorneys.'' 88 FR at 
88,296. So this rule does preserve a portion of the fee for agents and 
attorneys with non-direct pay fee agreements. If the agent or attorney 
with the non-direct pay fee agreement believes that portion is 
insufficient, they have 60 days to resolve the matter with the other 
parties on their own; if an agreement cannot be reached, they can 
request OGC reasonableness review.
    VA has considered the options presented by the commenter, including 
declining direct payment for discharged representatives, premising 
direct payment on a multi-factor test, or stopping direct payment 
altogether. But thousands of agents and attorneys and countless 
claimants still find value in direct payment, given (1) the relative 
certainty of collection it provides to agents and attorneys, (2) the 20 
percent fee limitation it guarantees for claimants, and (3) the power 
imbalance and potential for confusion that arises when a representative 
privately attempts to collect a fee from a claimant. While this rule's 
enactment of Sec.  14.636(h)(1)(iii) is itself evidence that VA is open 
to the prospect of declining direct payment in certain types of cases, 
VA is not willing--at this point--to abandon the direct payment option 
in the circumstances contemplated by the commenter (or to institute a 
potentially lengthy and subjective multi-factor test). Accordingly, VA 
makes no change in response to this comment.

Comment on Rosinski and Snyder

    One commenter stated that the ``cash payment'' provision that VA 
proposed to relocate without change from Sec.  14.636(h)(1)(iii) to 
Sec.  14.636(h)(1)(iv) ``directly conflicts'' with Rosinski v. Wilkie, 
32 Vet. App. 264 (2020), and Snyder v. Nicholson, 489 F.3d 1213 (Fed. 
Cir. 2007). VA thanks the commenter for the comment, but its proposed 
rule did not contemplate a substantive change to this provision; it 
merely relocated the provision without change to make way for a new and 
unrelated direct-payment requirement. That said, upon review of the 
comment, VA has determined that the continued propriety and suitability 
of the cash payment provision in light of Rosinski and Snyder does 
warrant additional consideration and public comment, so VA will issue a 
proposed amendment to the provision in an upcoming rulemaking. In terms 
of the current rulemaking, however, VA did not inform the public that 
the substance of this provision was at issue, and VA received no other 
comments weighing in on this issue, so VA declines to make any changes 
to the current rulemaking in response to this comment.

Questions About This Rule

    One commenter asked how VA will ensure that all affected parties 
will be provided a fee allocation notice, because (according to the 
commenter) ``VA mailing irregularities are well-documented.'' Under 
this rule, VA ``shall issue'' the fee allocation notice ``to the 
parties,'' which includes ``the claimant or appellant [and] any agent 
or attorney who represented the claimant or appellant in the case.'' 38 
CFR 14.636(i), (i)(1). So, all affected parties will be provided 
notice. But VA declines to implement any distinct procedure from its 
ordinary notification processes, and the commenter has suggested no 
alternative procedures.

[[Page 85061]]

    The commenter also asked ``what training and resources'' will be 
provided to retrain affected employees and ``what quality assurance 
will be implemented.'' Suffice it to say here that training will be 
provided, procedures manuals will be updated, and quality review will 
be implemented. Because the commenter has not suggested any specific 
actions on that front, VA declines further comment on the matter.
    The commenter further asked how VA ``will handle waiver of prior 
attorneys in fee cases,'' because (according to the commenter) a 
reasonableness review in the case of waiver ``is unnecessary'' and VA's 
approach to waiver has been ``inconsistent[ ].'' When an agent or 
attorney waives fees, VA will treat them as ineligible for direct 
payment (just like a pro bono agent or attorney) when applying the 
default rules of Sec.  14.636(i)(1)(i) and (ii) to the case.
    Finally, this commenter asked ``what notice VA will issue to whom 
if it determines there has been no qualifying request for review, or no 
entitlement to fees,'' because (according to the commenter) ``VA 
routinely makes such findings erroneously.'' As to ``no entitlement,'' 
as long as one ``direct-pay fee agreement[ ] has been filed,'' VA will 
provide notice to all parties of any determination of fee 
ineligibility. 38 CFR 14.636(i)(1). As to ``no qualifying request for 
review,'' if no request for OGC review or appeal to the Board is timely 
filed, VA may release the fee without additional notice. 38 CFR 
14.636(i)(2).
    The above question relates to a comment by another commenter, who 
recalled a situation where VA overlooked their direct-pay fee agreement 
and the claimant thus received the entirety of the past-due benefits. 
If the rare circumstance arises where VA mistakenly overlooks a direct-
pay fee agreement (or a timely request for OGC review) and releases the 
fee, the affected party should contact OGC, which could move to review 
the matter on its own initiative. 38 CFR 14.636(i)(4).
    A different commenter asked whether ``there should be a route to 
address'' the situation where veterans had to pay attorney fees from 
successful clear and unmistakable (CUE) claims pertaining to a 
Secretary of Veterans Affairs equitable relief decision on the issue of 
traumatic brain injury. Respectfully, this topic is outside of the 
scope of this rulemaking. This rulemaking does not address or amend any 
provisions regarding fees associated with CUE or equitable relief.
    VA thanks the commenters and makes no change in response to these 
questions.

Severability

    The purpose of this section is to clarify VA's intent with respect 
to the severability of provisions of this rule. Each provision of this 
rulemaking is capable of operating independently. If any provision of 
this rule is determined by judicial review or operation of law to be 
invalid, that partial invalidation will not render the remainder of 
this rule invalid. Likewise, if the application of any portion of this 
rule to a particular circumstance is determined to be invalid, VA 
intends that the rule remain applicable to all other circumstances.

Executive Orders 12866, 13563, and 14094

    Executive Orders (E.O.) 12866 and 13563 direct agencies to assess 
the costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). E.O. 13563 (Improving Regulation and Regulatory Review) 
emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. Executive 
Order 14094 (Modernizing Regulatory Review) supplements and reaffirms 
the principles, structures, and definitions governing contemporary 
regulatory review established in Executive Orders 12866 and 13563. The 
Office of Information and Regulatory Affairs has determined that this 
rulemaking is not a significant regulatory action under E.O. 12866, as 
amended by Executive Order 14094. The Regulatory Impact Analysis 
associated with this rulemaking can be found as a supporting document 
at www.regulations.gov.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The basis for this certification is the fact that the rule will 
merely institute reasonable default rules for fee allocation and 
provide that agents and attorneys who have lost their VA accreditation 
collect any earned fees without VA assistance. These changes will not 
result in any loss of fees to which an agent or attorney is reasonably 
entitled, because, as noted above, any party dissatisfied with the 
default allocation in a given case can request OGC's determination on 
reasonable fees in the case. Therefore, pursuant to 5 U.S.C. 605(b), 
the initial and final regulatory flexibility analysis requirements of 5 
U.S.C. 603 and 604 do not apply.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This final rule includes a provision constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521). The collection of information associated with this rulemaking 
has an assigned OMB control number of 2900-0605 requiring a 
reinstatement. A reinstatement of this collection of information 
requires review and approval by the Office of Management and Budget 
(OMB). Accordingly, under 44 U.S.C. 3507(d), VA has submitted a copy of 
this rulemaking action to OMB for review and approval. VA received no 
comments on the collection of information requiring reinstatement.
    OMB has received the collection of information for reinstatement. 
OMB's receipt of the collection of information for reinstatement is not 
an approval to conduct or sponsor an information collection under the 
Paperwork Reduction Act of 1995. In accordance with 5 CFR 1320, the 
collection of information reinstatement associated with this rulemaking 
is not approved by OMB at this time. OMB's approval of the collection 
of information reinstatement will occur within 30 days after the Final 
rulemaking publishes. If OMB does not approve the collection of 
information reinstatement as requested, VA will immediately remove the 
provision containing the collection of information or take such other 
action as is directed by OMB.
    The collection of information contained in 38 CFR 14.629 and 14.636 
is described immediately following this paragraph, under its respective 
title.
    Title: Application for Accreditation as a Claims Agent or Attorney, 
Filing of Representatives' Fee Agreements and Motions for Review of 
Such Fee Agreements.
    OMB Control No: 2900-0605.

[[Page 85062]]

    CFR Provisions: 38 CFR 14.636.
     Summary of collection of information:
    (1) Applicants seeking accreditation as claims agents or attorneys 
to represent benefits claimants before VA must file VA Form 21a with 
OGC. The information requested in VA Form 21a includes basic 
identifying information, as well as certain information concerning 
training and experience, military service, and employment.
    (2) Accredited agents and attorneys must file with VA any agreement 
for the payment of fees charged for representing claimants before VA. 
38 U.S.C. 5904(c)(2); 38 CFR 14.636(g).
    (3) Claimants, accredited agents, or accredited attorneys may 
request an OGC determination on a reasonable fee allocation in a given 
case. If they do, OGC will solicit (optional) responses from the other 
parties in the case. 38 U.S.C. 5904(c)(3); 38 CFR 14.636(i).
     Description of need for information and proposed use of 
information:
    (1) The information in the VA Form 21a is used by OGC to determine 
the applicant's eligibility for accreditation as a claims agent or 
attorney. More specifically, it is used to evaluate qualifications, 
ensure against conflicts of interest, and to establish that statutory 
and regulatory eligibility requirements, e.g., good character and 
reputation, are met.
    (2) The information in recertifications is used by OGC to monitor 
whether accredited attorneys and agents continue to have appropriate 
character and reputation and whether they remain fit to prepare, 
present, and prosecute VA benefit claims.
    (3) The information in a fee agreement is used by the Veterans 
Benefits Administration (VBA) to associate the fee agreement with the 
claimant's claims file, to potentially determine the attorney or 
agent's fee eligibility, and to potentially process direct payment of a 
fee from the claimant's past-due benefits. It is used by OGC to monitor 
whether the agreement is in compliance with laws governing paid 
representation, and to potentially review fee reasonableness.
    (4) The information in a request for OGC fee review, or a response 
to such request, is used by OGC to determine the agents' or attorneys' 
contribution to and responsibility for the ultimate outcome of the 
claimant's claim, so that a determination on reasonable fees can be 
rendered.
     Description of likely respondents: Claimants, Attorneys, 
Agents.
     Estimated number of respondents: 34,695.
    (1) For VA Form 21a applications, 2,280.
    (2) For recertifications, 4,860.
    (3) For fee agreements, 27,250 (750 first time filers and 26,500 
repeat filers).
    (4) For requests for OGC fee review, 305.
    Total estimated number of respondents (2,280, 4,860, 27,250, 305 = 
34,695).
     Estimated frequency of responses: One time.
     Estimated Completion Time: Varies as specified below.
    (1) For VA Form 21a applications, 45 minutes.
    (2) For recertifications, 10 minutes.
    (3) For fee agreements, 1 hour for first time filers and 10 minutes 
for repeat filers.
    (4) For requests for OGC fee review, 2 hours.
     Total Annual Burden Hours: 8,297 hours.
    (1) For VA Form 21a applications, 1,710 hours.
    (2) For recertifications, 810 hours.
    (3) For fee agreements, 5,167 hours (750 hours for first time 
filers and 4,417 hours for repeat filers).
    (4) For requests for OGC fee review, 610 hours.
    Total estimated annual burden (1,710 hours, 810, hours, 5,167 
hours, 610 hours = 8,297 hours).
     Estimated cost to respondents per year: $633,349.
    (1) For VA Form 21a applications, $79,845 ($41,360 + $22,666 + 
$15,819).

------------------------------------------------------------------------
 
------------------------------------------------------------------------
650 initial responses by           $84.84 x 487.5 hours       $41,360.00
 attorneys.                         (650 x 45 minutes/
                                    response).
960 initial responses by non-      $31.48 x 720 hours (960     22,666.00
 attorneys.                         x 45 minutes/response).
670 follow-up responses by non-    $31.48 x 502.5 hours        15,819.00
 attorneys.                         (670 x 45 minutes/
                                    response).
------------------------------------------------------------------------

    (2) For recertifications, $68,720 (810 hours x $84.84).
    (3) For fee agreements, $438,368 (5,167 hours x $84.84).
    (4) For requests for OGC fee review, $46,416 ($43,268 + $3,148).

------------------------------------------------------------------------
 
------------------------------------------------------------------------
255 responses by non-claimants...  $84.84 x 510 hours (255    $43,268.00
                                    x 120 minutes/response).
50 responses by claimants........  $31.48 x 100 hours (50 x     3,148.00
                                    120 minutes/response).
------------------------------------------------------------------------

    Total estimated cost to respondents per year: ($79,845, $68,720, 
$438,368, $46,416 = $633,349).
    * To estimate the total information collection burden cost, VA used 
the May 2023. Bureau of Labor Statistics (BLS) average hourly wage 
codes of 23-1011: Lawyers ($84.84) and 00-0000: All Occupations 
($31.48) to derive PRA estimates. This information is available at 
https://www.bls.gov/oes/current/oes_nat.htm. Please note numbers are 
subject to rounding for VA estimates.

Congressional Review Act

    Pursuant to Subtitle E of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (known as the Congressional Review Act) (5 U.S.C. 
801 et seq.), the Office of Information and Regulatory Affairs 
designated this rule as not satisfying the criteria under 5 U.S.C. 
804(2).

List of Subjects in 38 CFR Part 14

    Administrative practice and procedure, Claims, Courts, Foreign 
relations, Government employees, Lawyers, Legal services, Organization 
and functions (Government agencies), Reporting and recordkeeping 
requirements, Surety bonds, Trusts and trustees, Veterans.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs, approved and signed 
this document on October 17, 2024, and authorized the undersigned to 
sign and submit the document to the Office of the Federal Register for 
publication electronically as an official document of the Department of 
Veterans Affairs.

Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of 
General Counsel, Department of Veterans Affairs.

    For the reasons stated in the preamble, the Department of Veterans 
Affairs amends 38 CFR part 14 as set forth below:

[[Page 85063]]

PART 14--LEGAL SERVICES, GENERAL COUNSEL, AND MISCELLANEOUS CLAIMS

0
1. The authority citation for part 14 continues to read as follows:

    Authority: 5 U.S.C. 301; 28 U.S.C. 2671-2680; 38 U.S.C. 501(a), 
512, 515, 5502, 5901-5905; 28 CFR part 14, appendix to part 14, 
unless otherwise noted.

0
2. Amend Sec.  14.636 by:
0
a. Removing paragraph (c)(4);
0
b. Revising paragraphs (e), (g)(3), and (h)(1)(ii) and (iii);
0
c. Adding paragraph (h)(1)(iv); and
0
d. Revising paragraphs (i) through (k).
    The revisions read as follows:


Sec.  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.

* * * * *
    (e) Fee reasonableness factors. Fees set forth in a fee agreement, 
charged, or received for the services of an agent or attorney admitted 
to practice before VA must be reasonable. They may be based on a fixed 
fee, hourly rate, a percentage of benefits recovered, or a combination 
of such bases. Factors considered in determining whether fees are 
reasonable include:
    (1) The extent and type of services the agent or attorney 
performed;
    (2) The complexity of the case;
    (3) The level of skill and competence required of the agent or 
attorney in giving the services;
    (4) The amount of time the agent or attorney spent on the case;
    (5) The results the agent or attorney achieved, including the 
amount of any benefits recovered;
    (6) The level of review to which the claim was taken and the level 
of the review at which the agent or attorney was retained;
    (7) Rates charged by other agents or attorneys for similar 
services;
    (8) Whether, and to what extent, the payment of fees is contingent 
upon the results achieved;
    (9) If applicable, the reasons why an agent or attorney was 
discharged or withdrew from representation before the date of the 
decision awarding benefits; and
    (10) If applicable, the fee entitlement of another agent or 
attorney in the case.
* * * * *
    (g) * * *
    (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 Sec.  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, Board of 
Veterans' Appeals, or other VA office as appropriate. VA may accept fee 
agreements that were not filed within 30 days of execution upon a 
showing of sufficient cause.
    (h) * * *
    (1) * * *
    (ii) The amount of the fee is contingent on whether or not the 
claim is resolved in a manner favorable to the claimant or appellant,
    (iii) The agent or attorney is accredited (see Sec. Sec.  14.627(a) 
and 14.629(b)) on the date of VA's fee allocation notice (see paragraph 
(i) of this section), and
    (iv) The award of past-due benefits results in a cash payment to a 
claimant or an appellant from which the fee may be deducted. (An award 
of past-due benefits will not always result in a cash payment to a 
claimant or an appellant. For example, no cash payment will be made to 
military retirees unless there is a corresponding waiver of retirement 
pay. (See 38 U.S.C. 5304(a) and 38 CFR 3.750))
* * * * *
    (i) Fee review. For purposes of this paragraph (i), ``party'' means 
the claimant or appellant or any agent or attorney who represented the 
claimant or appellant in the case; ``eligible for direct payment'' 
means eligible for direct payment of a fee under the requirements of 
paragraphs (c), (g), and (h) of this section; ``continuous agent or 
attorney'' means the agent or attorney who provided representation that 
continued through the date of the decision awarding benefits; and 
``timely filed'' means within 60 days of the fee allocation notice.
    (1) When one or more direct-pay fee agreements has been filed in 
accordance with paragraph (g) of this section and a decision awards 
past-due benefits in a case, the agency of original jurisdiction that 
issued the decision shall issue to the parties a fee allocation notice. 
The fee allocation notice shall decide whether the agents or attorneys 
who filed direct-pay fee agreements in the case are eligible for direct 
payment, and shall provide one of two default fee allocations:
    (i) In cases where a continuous agent or attorney is eligible for 
direct payment, the default shall be allocation of the fee to the 
continuous agent or attorney.
    (ii) In cases where paragraph (i)(1)(i) of this section does not 
apply, the default shall be an equal split of the fee based on the 
number of agents or attorneys who are eligible for direct payment plus 
the claimant or appellant.
    (2) A party that disagrees with the default fee allocation in a 
given case may file a request for Office of the General Counsel fee 
review, as provided in paragraph (i)(3) of this section. A party that 
disagrees with a direct payment eligibility determination may only 
appeal to the Board of Veterans' Appeals. Absent a timely filed request 
for Office of the General Counsel fee review or a timely filed appeal 
to the Board of Veterans' Appeals, the default fee allocation described 
in paragraphs (i)(1)(i) and (ii) of this section is final and VA may 
release the fee.
    (3) A request for Office of the General Counsel fee review under 
this paragraph (i) must be filed electronically in accordance with the 
instructions on the Office of the General Counsel's website, or at the 
following address: Office of the General Counsel (022D), 810 Vermont 
Avenue NW, Washington, DC 20420. The request must include the names of 
the veteran and all parties, the applicable VA file number, and the 
date of the decision awarding benefits. The request must set forth the 
requestor's proposal as to reasonable fee allocation, and the reasons 
therefor, and must be accompanied by all argument and evidence the 
requestor desires to submit.
    (4) Upon the receipt of a timely filed request under paragraph 
(i)(3) of this section, or upon his or her own initiative, the Deputy 
Chief Counsel with subject-matter jurisdiction will initiate the Office 
of the General Counsel's motion for a fee review by sending notice to 
the parties. Not later than 30 days from the date of the motion, any 
party may file a response, with all argument and evidence the party 
desires to submit, electronically in accordance with the instructions 
on the Office of the General Counsel's website, or at the following 
address: Office of the General Counsel (022D), 810 Vermont Avenue, NW, 
Washington, DC 20420. Such responses must be served on all other 
parties. The Deputy Chief Counsel

[[Page 85064]]

with subject-matter jurisdiction may, for a reasonable period upon a 
showing of sufficient cause, extend the time for any party's response.
    (5) The General Counsel or his or her designee shall render the 
Office of the General Counsel's decision on the matter. The decision 
will be premised on the reasonableness factors of paragraph (e) of this 
section, the standards of paragraph (f) of this section, the limitation 
on direct payment of paragraph (h)(1)(i) of this section, the claims 
file, the parties' submissions, and all relevant factors. The decision 
may address the issue of fee eligibility if no other agency of original 
jurisdiction has made a determination on that issue.
    (6) The Office of the General Counsel's decision is a final 
adjudicative action that may only be appealed to the Board of Veterans' 
Appeals. Unless a party files a Notice of Disagreement with the Office 
of the General Counsel's decision, the parties must allocate any excess 
payment in accordance with the decision not later than the expiration 
of the time within which the Office of the General Counsel's decision 
may be appealed to the Board of Veterans' Appeals.
    (j) Failure to comply. In addition to whatever other penalties may 
be prescribed by law or regulation, failure to comply with the 
requirements of this section may result in proceedings under Sec.  
14.633 to terminate the agent's or attorney's accreditation to practice 
before VA.
    (k) Appeals. Except as otherwise provided in this section, appeals 
shall be initiated and processed using the procedures in 38 CFR part 20 
applicable to appeals under the modernized system.

[FR Doc. 2024-24708 Filed 10-24-24; 8:45 am]
BILLING CODE 8320-01-P