GN 03940: Fee Authorization Under the Fee Agreement Process
TN 21 (07-18)
A. General fee agreement evaluation policy
When we evaluate a fee agreement, we consider:
Whether the fee agreement meets all five statutory conditions for approval found in § 206(a)(2)(A) of the Social Security Act (Act);
Whether additional language or clauses in the fee agreement are unnecessary or irrelevant; and
Whether an exception to the fee agreement process exists.
NOTE: To identify the appropriate fee agreement decision maker, see GN 03940.002.
B. Statutory conditions for fee agreement approval
When a representative utilizes a fee agreement to obtain our approval to charge and collect a fee for services, the fee agreement must meet the following five statutory conditions:
1. Filed timely
The claimant or representative must submit the fee agreement to us before the date of the first favorable decision that the representative worked toward achieving, as explained in GN 03940.001B.
We use the date of the award or decision notice, not the date of adjudication or effectuation. The date of the first favorable decision under one title is controlling in concurrent claims.
If we receive more than one fee agreement, we act on the latest fee agreement received before the favorable decision date. We cannot consider a fee agreement filed after the favorable decision, even when signed prior to the favorable decision.
NOTE: Parties cannot submit a new fee agreement in lieu of a request for appointment, withdrawal, or revocation. The claimant must submit a separate writing to appoint a new representative or revoke an appointment, and a representative must separately withdraw his or her own appointment.
2. Submitted in writing
The claimant, the claimant's legal guardian, or the parent of a child under the age of 18 and the appointed representative must submit a fee agreement in writing. To validate the agreement, we also require that all parties sign the same agreement:
Either a court appointed representative, a parent of a child under age 18, or the legal guardian of legally incompetent claimant, refer to GN 00502.139 may sign the fee agreement.
If we determined that a claimant under age 18 can be his or her own payee, the claimant may sign the fee agreement. For developing capability for children, see GN 00502.070.
We can accept a representative’s stamped signature on a fee agreement unless we have reason to doubt the representative’s intent to sign the fee agreement. However, we must not accept a fee agreement with only the stamp or name of an entity. We only recognize individuals as representatives, not firms, corporations or other entities. The fee agreement must show the name(s) of each representative(s) who is party to the fee agreement.
We accept the claimant’s signature in pen and ink. While we cannot currently accept electronic signatures on fee agreements, we will as they become available through future systems enhancements.
We may contact the parties for clarification if the signatures are illegible or questionable.
The parties may submit a photocopy or fax of the original fee agreement.
We accept a fee agreement signed by multiple individuals as long as the claimant appointed at least one of them; however, we must only recognize and authorize a fee to the individuals who are properly appointed representative(s). We must not include in our fee considerations individuals who signed the fee agreement but were not appointed.
3. Meet the statutory fee limits
The fee requested in the fee agreement cannot exceed the lesser of 25 percent of the past-due benefits or the fee limit set by the Commissioner under the authority provided by section of the Act 206(a)(2)(A)(ii)(II). The current limit is $6,000.
The fee limit also applies to concurrent claims with a common issue. We cannot approve a fee greater than 25 percent of the combined Titles II and XVI past-due benefit amounts or $6,000 (or other statutory fee limit in effect).
We accept language in a fee agreement that permits an adjustment for the statutory fee limit in effect as of the day we approve the fee agreement. We also accept language that sets the percent or fee limit at an amount lower than the statutory limit. We must not accept language that establishes a specific minimum fee amount that may result in a fee of more than 25 percent of the past-due benefits.
4. Result in a favorably decided claim
To approve a fee agreement, the claim or action must result in a fully or partially favorable decision. This can be an initial favorable decision or a post-entitlement decision that leads to new past due benefits.
We still approve a fee agreement even if our decision is favorable to the claimant under only one title in a concurrent claim, so long as the agreement meets all other statutory conditions and no exceptions apply.
5. Yield past-due benefits
We must only approve a fee agreement when the claim or post-entitlement or post-eligibility (PE) favorable decision results in past-due benefits for a single claim or at least one title in concurrent claims. If we initially approved a fee agreement on the condition that there are past due benefits, but, at the time we effectuate the favorable decision, we find that there are no past-due benefits, we cannot process the fee agreement approval. In these situations, we must notify the representative(s) and the claimant that the representative(s) must file a fee petition in order to charge and collect a fee. For notice language, refer to NL 00720.050.
The fee agreement process applies to claims for initial entitlement, as well as PE actions that involve new entitlement for additional benefits or reopening after termination.
We must disapprove fee agreements received in connection with processing PE actions that only adjust benefit amounts or remove payment suspensions from benefits for which we have already established entitlement (e.g., changes in workers’ compensation offset, resolution of earnings discrepancies, increased payments from work ending while disabled), even though the decisions may result in past-due benefits.
NOTE: Other actions may result in past-due benefits; however, the fee agreement process applies only to claims for entitlement.
C. Factors immaterial to the fee agreement evaluation process
We do not require a standard fee agreement format. We accept various forms and language choices, so long as:
the agreement meets each of the five statutory requirements,
the case is for entitlement, and
no exceptions apply.
We may approve the fee agreement without considering certain terms or provisions appearing in the fee agreement, such as:
1. Representative’s hours and services
We do not consider representative’s hours and services when deciding whether to approve or disapprove the fee agreement.
2. Agreements or arrangements unrelated to the authorized fee
We do not consider agreements or other arrangements between the claimant and the representative unrelated to the authorized fee. Some examples include:
Agreements for the payment of out-of-pocket expenses (e.g., costs involved in obtaining copies of medical reports or paying state sales tax). Reasonable out-of-pocket expenses are not subject to our review. For more information on fees not subject to our review, see GN 03920.010.
Agreements that a third party will pay the representative part of the authorized fee. The representative cannot charge or receive a total fee for services provided on the claim(s) of more than the amount that we authorize. Importantly, when using the fee agreement process, the total amount requested may not exceed the statutory fee limits, even if the fee is being paid in part by the claimant and in part by a third party. A representative must submit a statement of the fee expected from a third party as part of or in addition to the fee agreement.
The right to charge interest on the unpaid balance of the authorized fee.
A plan to share the authorized fee with another person who referred the case.
3. Language related to the right to request review
There is a statutory right to request administrative review of the amount set as the maximum fee. Therefore, we do not consider language in the agreement concerning administrative review. We explain administrative review rights in our fee determination notice.
4. Death of claimant or representative
We do not consider the death of the claimant, whether the claimant died before or after we issue a favorable decision.
We do not consider the death of the representative after we issue a favorable decision. The decision maker notifies the deceased representative’s executor or estate administrator of the fee agreement approval, redacting any personally identifiable information (PII) related to the claimant that is not necessary or relevant to the fee agreement approval process.
For fee payment in either situation, refer to GN 03940.009.
If the representative dies before the favorable decision, refer to GN 03940.003 D.6 in this section.
D. Exceptions to the fee agreement process
We do not approve fee agreements if the approval could lead to authorization of fees that would be unfair to the claimant or the representative, e.g., fees in excess of the statutory limit, erroneous approval of multiple fee agreements to different representatives, or payment to a representative who is not eligible for fees.
Therefore, the fee authorizer must review the entire case, including all representative appointments, withdrawals, revocations, and all fee agreements submitted during the life of the claim to determine if an exception applies.
The fee authorizer must disapprove the fee agreement in the following situations:
1. Claimant appoints multiple representatives and all did not sign a single fee agreement
The fee authorizer must disapprove a fee agreement if the claimant appoints more than one representative and not all of the appointed representatives signed a single fee agreement.
We define a “single fee agreement” as one document signed by all parties (whether the representatives work for the same or different entities or for themselves). Therefore, if the claimant appoints another representative after submitting a fee agreement, this additional representative must sign onto the original agreement, or the parties must submit a new agreement signed by all.
NOTE: The fee authorizer can approve the fee agreement if the representative(s) who did not sign the fee agreement waived charging and collecting a fee and the agreement meets all other conditions for approval. References:
GN 3920.020 Waiver of Fee or of Direct Payment of Representative's Fee
GN 3920.050 Releasing Withheld Funds for Representatives’ Fees
2. Approval could violate a provision in a two-tier fee agreement
A two-tier fee agreement functions as a fee agreement through a prescribed level, usually the first hearing. The fee authorizer can approve a two-tier fee agreement only if the level at which we make a favorable decision is within the confines of the fee agreement. For instructions on processing two-tier fee agreements, see GN 03940.005. If the claimant did not receive a favorable determination or decision during the indicated level and wants to appeal the determination or decision, the representative must submit a fee petition at the end of his or her service.
3. Claimant revokes the appointment or the representative withdraws before we decide the claim
The fee authorizer must disapprove the fee agreement when the claimant discharges a representative or a representative withdraws from the case before we favorably decide the claim. We do not contact the representative after termination of services.
The fee authorizer must approve a fee agreement for the remaining or new representative(s) if the revoked or withdrawn representative waived charging and collecting a fee and the agreement meets all other conditions for approval.
4. Claimant is legally incompetent and the legal guardian did not sign the fee agreement
The fee authorizer must disapprove a fee agreement if a state court declared the claimant legally incompetent prior to a favorable decision and the claimant's legal guardian did not sign the fee agreement.
The fee authorizer must not disapprove a fee agreement only because the claimant is mentally incapable of managing funds and requires a representative payee, or because we are evaluating the claimant's mental capability.
GN 03940.037 Title II - FO and PC Processing of Fee Agreements on Claims Involving Mental Capability - General
GN 03940.051 Field Office Processing of Fee Agreements on Title XVI or Concurrent Titles II and XVI Claims Involving Mental Capability
5. Representative is suspended or disqualified
The fee authorizer must disapprove the fee agreement for a suspended or disqualified representative if we favorably decide the claim after the effective date of the individual’s suspension or disqualification. For more information on processing claims with suspended or disqualified representatives, see GN 03970.060.
6. Representative dies before the favorable decision
When a representative dies before we issue a favorable decision, and the claimant or representative submitted an otherwise valid fee agreement, the fee authorizer must:
disapprove the fee agreement at the time of the decision, and
notify the parties, including the deceased's estate, (redacting PII, as necessary), that we disapproved the agreement, but the estate may request a fee for the deceased representative’s services by filing a fee petition. For processing payments, see GN 03940.009.