TN 17 (11-09)

A. Definitions

1. Nonprofit organization

A nonprofit organization is one that is exempt from income tax under section 501 or 521 of the Internal Revenue Code, as discussed in RS 01901.540.

Generally, most nonprofit organizations considered within the scope of this section are those, which perform, or arrange for the performance of, representative services on behalf of claimants and assume responsibility for the payment of these services at no cost to the claimants.

2. Government agency

Government agency is used in the common sense of the term (i.e., a Federal, State, county, or city agency).

3. Third-party entity

A third-party entity is a business, firm, or other association, including but not limited to partnerships, corporations, for-profit or nonprofit organizations, or a government agency. As used in this section, a third-party entity provides a claimant with representation and pays the representative’s fee and expenses without passing any financial liability to the claimant or any auxiliary beneficiaries.

4. Out-of-pocket expenses

Out-of-pocket expenses are expenses incurred by the representative for which the representative has been paid or expects to be paid. Out-of-pocket expenses include, but are not limited to, the cost of obtaining copies of doctor or hospital reports, birth or death certificates, postage, and photocopying. They do not include paralegal or secretarial services, in-house experts, review of fees, or any share of the representative's overhead or utility costs.

5. Waiver statement

A waiver statement is a written statement a representative submits to document that the representative does not wish for us to withhold past-due benefits for direct fee payment or does not wish to charge or collect a fee. We accept three types of waiver statements:

1. Waiver of direct payment – the representative waives the right to receive direct payment of his or her fees. We will authorize the fee the representative will charge, but we will not withhold any amount from the claimant’s past-due benefits or pay that fee. The representative must collect his or her fee directly from the claimant (see GN 03920.020B.2).

2. Waiver of payment of the fee from a claimant and any auxiliary beneficiaries – the representative relieves the claimant and any auxiliary beneficiary from all liability to pay a fee and any expenses, but may charge and collect the fee from another source. We may not have to authorize this fee if certain specific criteria are met (see GN 03920.010B).

3. Waiver of all fees – the representative will not charge or collect a fee from any source (i.e., the claimant or a third party) for services the representative provided in representing the claimant before us or before a court. This relieves the claimant of all liability to pay a fee and expenses for those services (see GN 03920.020 for waiver procedures).

B. Policy for payment of fee by a third-party entity

1. General provisions of authorization of fees for representatives

A primary purpose of SSA's statutory authority to authorize fees for representation is to protect claimants against unreasonable fees.

However, when a third-party entity pays for the representative’s services, the risk of claimants’ liability for unreasonable fees is eliminated. Therefore, when a third-party entity pays the representative’s fees and certain conditions are met, we do not need to authorize the representative’s fee.

2. When we do not need to authorize a fee

Our regulations at 20 C.F.R. §§ 404.1720 and 416.1520 do not require fee authorization by SSA under the following conditions:

• The claimant and any auxiliary beneficiaries are free of direct or indirect financial liability to pay a fee or expenses, either in whole or in part, to a representative or to someone else; and

• A third-party entity, or a government agency from its own funds, pays the fee and expenses incurred, if any, on behalf of the claimant or any auxiliary beneficiaries; and

• The representative submits to SSA a form SSA-1696-U4 (or a written statement) waiving the right to charge and collect a fee and expenses from the claimant and any auxiliary beneficiaries as specified in GN 03920.020B.3.b.

C. Policy for out-of-pocket expenses

We do not authorize out-of-pocket expenses (see examples of out-of-pocket expenses in GN 03920.010A.4). These expenses are a matter for the representative and claimant to settle. However, we will question out-of-pocket expenses if it appears that the representative is attempting to circumvent our fee authorization process by designating his or her services as out-of-pocket expenses or if the alleged out-of-pocket expenses appear unreasonable. If we question out-of-pocket expenses, we may require the representative to provide proof of such expenses.

D. Policy for court proceedings

We do not consider the services in proceedings before state or Federal courts (even if the state court action was to establish relationship or death) to be services provided in connection with proceedings before us; therefore, the fee authorization provisions do not apply to court proceedings. However, we must still withhold past due benefits for possible direct payment of fees authorized by the court. For information about reimbursement of expenses incurred in the course of court actions (see, Equal Access to Justice Act GN 03990.000).

E. Policy for legal guardian or other state court-appointed representative

A legal guardian, committee, conservator, or other state court-appointed representative (hereinafter “legal guardian”) may ask the court to approve a fee for services provided in connection with proceedings before us. If the court orders a fee, we do not need to authorize that fee.

• If a legal guardian asks us for information regarding fees, advise the legal guardian to ask the state court to approve a fee for all services, including those provided in connection with proceedings before us.

• If a legal guardian files a fee petition, advise the legal guardian that we do not act on the fee request until the state court has acted.

  EXCEPTION: If the legal guardian notifies us that the court declined to order a fee on the fee request, advise the legal guardian to file a fee petition for only those services provided in proceedings before us. If the legal guardian files a fee petition, the legal guardian must provide all of the following:

• copies of the accounting submitted to the court;

• copies of the fee request submitted to the court; and

• the court's decision to not act on the fee request, or any court-ordered fee for services performed as legal guardian.

F. Policy for Medicare Parts A and B cases

1. Fee agreement process not applicable to Medicare cases

The fee agreement process cannot apply in Medicare-only cases because there are no “past-due benefits” from which to calculate a representative's fee. A successful appeal of a claim for payment or service in Medicare results only in a decision to:

• pay a provider or supplier directly for items or services already provided or rendered;

• reimburse a beneficiary for monies the beneficiary has already paid directly to the provider or supplier for an item or service; or

• approve authorization for a request for service.

2. Services below the hearing level for Part B cases

We do not consider services below the hearing level in connection with claims in certain proceedings exclusively before Part B intermediaries or carriers to be services provided in connection with proceedings before us; therefore, the fee authorization provisions do not apply to those services.

3. Fee petition filed by a representative for services provided to the beneficiary

We use the same procedures and regulations to approve a fee petition filed by a Medicare beneficiary's representative (see 20 CFR 404.1720 – CFR 404.1725). However, because there are no past-due benefits in Medicare cases, there are no direct pay provisions for representatives.

4. Fee petition filed by a representative of any party other than the beneficiary

In Medicare cases, we do not authorize a fee for services provided to anyone other than the beneficiary because the Centers for Medicare and Medicaid Services (CMS) considers 20 CFR Part 404, Subparts J and R to apply only to fee petitions filed by the representative of a beneficiary (see 42 CFR 405.701(c) and 42 CFR 405.801(c)).