Last Update: 2/25/05 (Transmittal I-1-48)
A claimant and his/her representative may submit a fee agreement that includes a provision limiting the agreement's application to services through a specific level of the administrative appeals process. Such an agreement would provide, in essence, for a two-tiered fee structure. The decision maker will be able to readily ascertain, at the time of the favorable decision, which tier of the fee structure applies, and will either approve or disapprove the fee agreement, based on the current level of appeal.
The decision maker will approve such an agreement if, considering the tier that applies to the level at which the claim was favorably decided, the agreement meets the statutory conditions for approval and none of the exceptions apply. (See I-1-2-12.)
The decision maker will disapprove the agreement if, considering the tier that applies to the level at which the claim is first favorably decided, the agreement does not meet the statutory conditions for approval. Disapproval of the fee agreement notifies the claimant and the representative that the Social Security Administration (SSA) will not authorize a fee based on the fee agreement. The basis for the disapproval is that the agreement does not limit the fee to the lesser of 25 percent of the claimant's past-due benefits or $6,000.
Example: The claimant and representative submit a fee agreement that provides the following:
If SSA favorably decides the claim(s) at or below the first Administrative Law Judge (ALJ) hearing decision, the fee shall be the lesser of 25 percent of past-due benefits or $6,000.
If the claim progresses beyond that level of the administrative review process, the representative will request a fee through the fee petition process.
If the applicable clause is the first clause, the requirement of § 206(a)(2)(A)(ii) of the Social Security Act is satisfied (i.e., the fee requested did not exceed the lesser of 25 percent of past-due benefits or $6,000), and the ALJ will approve the agreement if it meets all other conditions for approval and no exceptions apply.
If the second clause applies (e.g., the ALJ issues the first favorable decision following a remand by the Appeals Council (AC)), § 206(a)(2)(A)(ii) of the Social Security Act would not be satisfied and the ALJ will disapprove the fee agreement because the fee specified was not limited to the lesser of 25 percent of past-due benefits or $6,000.
If the representative's involvement begins after the initial hearing decision and the representative and claimant enter into an agreement that applies to administrative decisions made through the initial hearing decision, the SSA decision maker can not approve the fee agreement.
When an ALJ issues a partially favorable decision at the initial hearing level and approves a two-tiered fee agreement that applies only to services through the initial hearing level, SSA authorizes the representative's fee in effectuating the partially favorable decision. Generally, if the representative is eligible for direct fee payment from the claimant's past-due benefits, SSA will process the representative's fee payment.
If the claimant appeals the partially favorable decision, further action related to the fee agreement and the representative's fee for services will depend upon:
whether the representative pursues additional fees above $6,000 for his/her services,
whether the fee initially authorized was less than $6,000, and
the action SSA takes on the claim on appeal.
Example: The following example illustrates a case involving both a subsequent decision (see I-1-2-14) and a two-tiered fee agreement. For the purpose of the discussion in 1. through 6. below, assume:
The fee agreement between the claimant and his/her representative is a two-tiered agreement that includes terms similar to the following:
If SSA favorably decides the claim at or below the first ALJ hearing level, the representative's fee will be the lesser of 25 percent of past-due benefits or $6,000.
If SSA favorably decides the claim at the AC level, or at the ALJ hearing level after a remand by the AC or a Federal court, the representative will petition SSA for approval to charge a fee not in excess of 25 percent of all past-due benefits.
If SSA does not issue a favorable decision, no fee will be charged in the case. With this provision, the representative agrees to represent the claimant on a contingency basis (i.e., the representative receives a fee only if SSA favorably decides the claim).
At the initial ALJ hearing level, an ALJ issues a partially favorable decision and approves the fee agreement.
The representative or claimant appeals the partially favorable decision or the AC reviews the decision on its own motion.
If the representative wants to be able to charge more, for any reason (e.g., because of the additional work anticipated on the appeal), he/she must file a request for administrative review of the fee amount within 15 days after he/she receives the award notice. The claimant or SSA decision maker may also ask SSA to decrease the fee amount. If no party requests administrative review timely, SSA will not review the fee authorization unless good cause for late filing is established.
If the representative requests administrative review, he/she should explain, for example: “If additional benefits are payable as a result of our appealing the ALJ's partially favorable decision, I intend to seek approval to charge a fee greater than $6,000. At the conclusion of the case, I will identify the amount I want to charge, the amount authorized before, the services performed for the claimant (and auxiliary beneficiary(ies) (if any)) and the time spent on each type of service.”
If the representative files a timely request for administrative review:
He/she may accept the fee authorized under the approved agreement while recognizing that the amount he/she is authorized to charge and collect may change as a result of administrative review.
There is no statutory time limit within which SSA must act on the administrative review; therefore, SSA will delay action on the request until it completes its action on the appeal.
After SSA completes its action on the appeal, the component that takes the last administrative action will send the request for administrative review to the SSA official authorized to conduct the review. If the AC issued the last administrative action, the Attorney Fee Branch (AFB) will consider the administrative review request. If an ALJ issued the final administrative action, the Regional Chief ALJ is the reviewing official. The reviewing official will:
notify the representative where to send his/her statement of time and services to support the administrative review request, and
give the claimant and any other parties to the claim 15 days to comment on what the representative submitted to support his/her request for administrative review. (Refer to I-1-2-41 ff. for guidelines on evaluating requests for administrative review.)
It is not necessary for the representative to request administrative review when he/she receives the first award certificate if he/she only wishes to obtain a greater fee of up to $6,000 total based on any additional past-due benefits. If, on appeal, the decision is more favorable to the claimant and additional past-due benefits result, SSA will issue an amended notice of award indicating a new fee amount.
If the representative then wants to charge more than the total authorized fee for any reason, the representative must file a request for administrative review of the amount of the fee within 15 days after he/she receives the amended notice. Also, the claimant or SSA decision maker may ask SSA to decrease the fee. Refer to 1. above to determine the correct reviewing official.
As stated in I-1-2-11, if the AC vacates the ALJ's favorable decision and remands the case, the ALJ's approval of the fee agreement and any authorization of fees under the agreement are vacated as well because there is no favorable decision. In the two-tiered fee agreement example described above, the representative agreed to represent the claimant on a contingency basis with the fee premised on a percentage of past-due benefits if successful, and nothing if unsuccessful.
If the outcome on remand is favorable:
The ALJ who issues the decision should disapprove the fee agreement because the agreement does not limit the fee to the lesser of 25 percent of past-due benefits or $6,000.
If the representative wants to charge and collect a fee, he/she must submit a fee petition when his/her services have ended. This fee petition should include the services and time spent in conjunction with the first hearing.
If the outcome on remand is unfavorable:
The representative has agreed, based on the contingency agreement he/she had with the claimant, not to charge the claimant a fee.
The ALJ who issues the decision will not act on the fee agreement or invite the representative to file a fee petition. If the representative files a fee petition, the ALJ will authorize $00.00 fee and explain why.
If the representative has not already done so, the processing center will request the representative to refund any fee paid directly to him/her from past-due benefits.
If the AC grants a request for review or reviews the hearing decision on its own motion and issues a fully favorable decision, the fee agreement the ALJ approved remains in effect. If a party requested administrative review of the fee resulting from the ALJ's decision, or requests administrative review of the fee resulting from the AC's decision, refer to 1. above.
If the AC grants the request for review, upholds and does not vacate the favorable aspect of the ALJ's decision, and remands the case to an ALJ for a new decision with regard to the unfavorably decided issues(s), the fee agreement (which the ALJ approved) remains in effect. If a party requested administrative review of the fee resulting from the ALJ's decision, or requests administrative review of the fee resulting from the AC's decision, refer to 1. above.
If the AC grants the request for review or reviews a decision on its own motion, vacates the hearing decision, and reverses the ALJ's partially favorable decision by issuing a wholly unfavorable decision, the ALJ's approval of the fee agreement is no longer in effect because one of the criteria for fee agreement approval (i.e., a favorable decision), is not met. Because the attorney is representing the claimant on a contingency basis, with the fee premised on a percentage of past-due benefits if successful and nothing if unsuccessful, the attorney is not entitled to a fee and must return any previously paid fee amount to SSA if the unfavorable decision becomes the final decision of the Commissioner.
If the representative did not represent the claimant on a contingency basis, the representative must file a fee petition to obtain authorization to charge and collect any fee (including any amount SSA previously authorized and paid) for services provided at the administrative level.