GN 03940: Fee Authorization Under the Fee Agreement Process
Social Security Act (the Act), as amended by Pub. L. No. 101-508; §§ 206(a), 163(d)(2)(B), and 1127 of the Act; and § 413(b) of the Federal Mine Safety and Health Act
TN 17 (03-05)
SSA has two alternative methods of authorizing representatives' fees:
the fee petition process described in GN 03930.000, and
the fee agreement process described herein. The fee agreement process was first applicable for claims and post-entitlement actions decided on or after July 1, 1991.
If the representative elects to use the fee agreement process, the claimant or the representative(s) must submit the agreement to SSA before the date SSA makes the first favorable determination or decision (hereinafter, we generally refer to both as a "decision") the representative worked toward achieving on a claim or post-entitlement or post-eligibility (PE) action. The date SSA makes a favorable decision is the date shown on the notice of favorable decision (see GN 03940.001B.). Refer to GN 03940.003B.5. for guidance on actions for which SSA cannot approve a fee agreement.
The fee agreement decision maker will approve or disapprove the fee agreement. To be approved, the fee agreement must meet the statutory conditions defined in GN 03940.003B. The fee agreement will be excluded from the fee agreement process if one of the exceptions listed in GN 03940.003D. applies.
Unless the claimant or representative submits a fee agreement before the date SSA makes the first favorable decision the representative worked toward achieving on a claim or PE action, SSA assumes the representative will either file a fee petition or waive a fee. (See GN 03920.020 for policies and procedures on waiver.)
The two fee authorization processes are not interchangeable. However, if a representative elects the fee agreement process but SSA does not approve the agreement (i.e., it either does not meet the statutory conditions described in GN 03940.003B. or an exception in GN 03940.003D. applies), or if a party to the agreement requests administrative review of the disapproval and SSA upholds the disapproval (see GN 03960.000 for administrative review policy and procedures), the representative must file a fee petition if he/she wants to charge and collect a fee.
If a decision maker approves a fee agreement in connection with a favorable decision, but the favorable decision is later vacated, the approval of the fee agreement and any authorization of fees under the agreement are vacated as well because there is no favorable decision. If a decision maker subsequently issues a favorable decision, he/she will make a new decision to approve or disapprove the fee agreement.
Because fee agreements apply only to cases in which SSA issues the favorable decision, fee agreements do not apply to cases in which a Federal court issues the favorable decision.
B. Policy - Date SSA Makes A Favorable Decision
The date SSA makes a favorable decision is the date shown on the notice of favorable decision. It is not the date of adjudication or effectuation (see GN 03920.030D., Policy – Month of Effectuation).
1. Initial or Reconsideration Level
For claims or PE actions decided at the initial or reconsideration level, the date of the notice to the claimant is the controlling date. Therefore, if the claimant or representative submits a fee agreement before SSA issues the notice of favorable decision, the claim(s) must be processed as a fee agreement claim. This situation may occur when a field office (FO) receives a fee agreement after making the necessary systems inputs to pay the claim, but before SSA has issued the notice of favorable decision. In this situation, refer to GN 03940.010C.
2. OHO Levels
For claims or PE actions decided by the Office of Hearing Operations, the date of the hearing or Appeals Council decision is controlling.
The "date SSA makes a favorable decision" does not determine the period of past-due benefits (see GN 03920.030, Representative’s Fee – Title II Past-Due Benefits and GN 03920.031, Representative’s Fee - Title XVI Past-Due Benefits).
C. Policy - Fee Agreement Document
A fee agreement is a written statement signed by the claimant and his/her appointed representative specifying the fee the representative expects to charge and collect and the claimant expects to pay for services the representative provides in pursuing the claimant's benefit rights in proceedings before SSA. (GN 03920.005C. defines "proceedings before SSA.") Although the fee agreement must be a written statement, there is no statutorily prescribed language. Therefore, representatives may craft their own fee agreements and decision makers will approve an agreement if the statutory conditions of the fee agreement provisions are met and no exceptions apply. (See GN 03940.003 for fee agreement evaluation policy.)
The representative or claimant may submit the original fee agreement or a photocopy of the original document, or may fax the fee agreement to SSA.
The fee agreement:
May be combined with the appointment of representative document.
Remains in effect throughout the administrative appeals process of a claim(s) and during the administrative proceedings following a court remand.
May contain a provision that limits its application to services through a specific level of the administrative appeals process.
EXAMPLE: A provision in the fee agreement may state “This agreement remains in effect only through the initial Administrative Law Judge hearing.” Such a provision would provide, in essence, for a two-tiered structure. Refer to GN 03940.005 for policy on two-tiered agreements.
May contain language that would apply if the Commissioner increases the fee agreement cap after the date of the agreement. (See GN 03940.003B.3. for examples.)
May be amended, before the date of the favorable decision, to comply with the requirements of the fee agreement process or to revise a provision in the agreement (e.g., the maximum fee). The decision maker will approve or disapprove the latest dated fee agreement.
GN 03940.090B. Exhibit 1 and http://mwww.ba.ssa.gov/representation/model_fee_agreement_language.htm show model language for a fee agreement that complies with the statutory conditions for approval. However, because an agreement is between the representative and his/her client, each is unique, may appear in any form, and may include provisions in addition to the fee (e.g., interest on an unpaid balance of an authorized fee, establishing a trust or escrow account, or payment of out-of-pocket expenses for medical reports). GN 03940.004C.2. and GN 03940.004C.3. provide examples of provisions that will not or will cause SSA to disapprove the fee request.
D. Policy - Fee Agreement Determination
The decision maker's determination on a fee agreement is limited to whether the agreement meets the statutory conditions of the Act and is not otherwise excepted. The decision maker, by applying the criteria in GN 03940.004, approves or disapproves a fee agreement when making a fully or partially favorable decision, subject to the condition that the decision will result in past-due benefits.
In concurrent titles II and XVI claims, the title II decision maker makes the decision for both titles (see GN 03940.002 for the definition of decision maker) and the date of notice of the favorable decision under the first title is controlling for both titles. SSA will never approve a fee agreement under one title and disapprove it under the other title, even if the fee agreement is submitted between decisions.
EXAMPLE: The title II decision maker disapproves the fee agreement because it was not submitted before SSA made a favorable decision on the title II claim. Although SSA has not issued the notice of favorable decision under title XVI, the decision maker also disapproves the fee agreement under that title.
At the initial and reconsideration levels, the decision makers may use a Form SSA-553 (Special Determination) or an equivalent using the sample language given in GN 03940.090 Exhibit 2 to record the fee agreement determination. The equivalent in MCS is the RPOC screen and the equivalent in MSSICS is the DROC screen. (See GN 03940.090C. Exhibit 2 for a sample Form SSA-553; MSOM MCS 008.007 for the RPOC screen; MSOM MSSICS 022.010 for the DROC screen.)
If the decision on the claim is unfavorable (in concurrent titles II and XVI claims, this means both decisions are unfavorable), the decision maker does not make a determination on the fee agreement and will not provide a notice about the fee agreement.
NOTE: If an individual who has been suspended or disqualified to act as a representative submits a fee agreement, refer to GN 03970.060.
E. Policy - Administrative Review
Subsections 206(a)(2), 206(a)(3) and 1631(d)(2) of the Act establish administrative review for fee agreement determinations. Under the fee agreement process, administrative review may involve either or both of the following two issues:
the approval or disapproval of the fee agreement; and/or
the amount of the fee authorized under the terms of the agreement.
The claimant, affected auxiliary beneficiary(ies), affected eligible spouse (see GN 03920.031B., Policy - Title XVI Past-Due Benefits), and representative have an unqualified right to request administrative review of the fee agreement approval or disapproval and/or of the amount of the fee.
A decision maker who approved a fee agreement may request a reduction of the amount of the fee only when the record shows that either:
the representative failed to represent the claimant's interest adequately; or
the fee is clearly excessive in light of the services provided.
GN 03960.000 provides policy and procedures for administrative review under the fee agreement process.
F. Policy - Fee Agreement Approved Incorrectly
If a decision maker approves a fee agreement that does not meet the statutory requirements of the Act, or is otherwise excepted, SSA cannot authorize a fee under the fee agreement process. See GN 03940.020G. and GN 03940.025C.4. for instructions on handling claims involving fee agreements that are approved incorrectly. In such a case, an SSA reviewer (GN 03960.001D.12. defines "reviewer") will disapprove the fee agreement and advise the claimant and the representative that if the representative intends to charge and collect a fee for his/her services in the case, he/she must file a fee petition.