SSR 85-3: SECTIONS 206(a) AND 1631(d)(2) (42 U.S.C. 406(a) AND 1383(d)(2)) AND SECTION 413(b) OF THE FEDERAL MINE SAFETY AND HEALTH ACT OF 1977 (30 U.S.C. 923(b)) ATTORNEY FEES PAID BY A NON-PROFIT ORGANIZATION OR A GOVERNMENT AGENCY OUT OF FUNDS PROVIDED BY A GOVERNMENT ENTITY -- FEE-SETTING REGULATIONS INAPPLICABLE

20 CFR 404.1720(b)(3), 410.686b(b) AND 416.1520(b)(3)

SSR 85-3

: Where a representative performs services for a title II, title XVI, or black lung claimant or beneficiary in proceedings before the Secretary, where the representative's fee for such services and any expenses are paid by a nonprofit organization or a government agency out of funds provided or administered by a government entity, and where the claimant or beneficiary incurs no liability, either directly or indirectly, for the cost of such services, including expenses (the representative having waived the right to charge or collect a fee and expenses from the claimant or beneficiary), held, the fee arrangement is not within the purview of the fee-setting regulations and thus, the representative is not required to obtain the Social Security Administration's authorization of a fee.

A question has been raised as to whether an attorney who represents a claimant or beneficiary in connection with a claim before the Secretary of Health and Human Services (the Secretary) under title II or title XVI of the Social Security Act (or under part B of title IV of the Federal Mine Safety and Health Act of 1977), and whose fee for such representation is paid by a nonprofit organization out of funds provided by a government entity, must have his or her fee approved by the Social Security Administration (SSA). In the case presented, the claimant or beneficiary does not incur any direct or indirect cost for the representative's services. The representative's fee and expenses, if any, are paid entirely by a nonprofit organization from funds provided by a government agency.

Sections 206(a) and 1631(d)(2) of the Social Security Act, and section 413(b) of the Federal Mine Safety and Health Act of 1977, give the Secretary the authority to prescribe, by rule and regulations, the maximum fees a claimant's or beneficiary's representative (i.e., an attorney or other qualified representative) may charge for services performed in connection with any claim for retirement, survivors, or disability insurance; supplemental security income; or black lung benefits. The implementing regulations (20 CFR 404.1720, 410.686b and 416.1520) provide that a representative may not charge or receive a fee unless it is first approved by SSA, and further indicate that this rule applies whether the fee is charged to or paid by the claimant/beneficiary or someone else.

A prime purpose underlying the statutory grant of authority to the Secretary to set maximum fees, is to protect claimants and beneficiaries against unreasonable attorney fees. The implementing regulations are intended to carry out this statutory purpose. In the present case, the claimant or beneficiary incurs no liability, either directly or indirectly, for the cost of the representative's services. The risk that the individual may be charged an unreasonable fee is not present inasmuch as the representative's fee is paid entirely from funds administered by the State. Therefore, it is concluded that the fee arrangement in the present case, under which the attorney foregoes any right to charge or collect a fee and expenses from the claimant or beneficiary, is not within the purview of the regulations requiring that a representative's fee by approved by SSA; that is, the fee-setting regulations do not apply where all of the following conditions are met:

: 1. The claimant or beneficiary (including any auxiliaries) is free of any liability to pay a fee or any expenses, or any part thereof, directly or indirectly, to the representative or to someone else.
: 2. The entity which pays the fee and expenses incurred, if any, on behalf of the claimant(s) or beneficiary(ies) is a nonprofit organization or a Federal, State, county or city agency.
: 3. The payment of the fee and any expenses is made from funds provided or administered by a government entity.
: 4. The representative submits to SSA a written statement waiving the right to charge and collect a fee and expenses from the claimant or beneficiary.

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